The Effect of Bundled Payment on Emergency Department Use: Alternative Quality Contract Effects After Year One


The Issue

New methods for paying health care providers offer the promise of containing health care costs without compromising quality of care. In Massachusetts, Blue Cross Blue Shield has entered into global budget contracts with seven organizations representing 321 primary care practices. Under the insurer’s Alternative Quality Contract (AQC), primary care providers receive a single prospective payment for each enrollee’s care and share in the risk for overall spending. Providers also are eligible to receive bonuses for meeting quality benchmarks. Commonwealth Fund–supported researchers examined the impact of the AQC on emergency department use.

What the Study Found

The researchers examined claims submitted from 2006 through 2009 for approximately 333,000 Blue Cross Blue Shield patients whose primary care physicians were enrolled in the AQC and 1.3 million patients whose physicians were not enrolled in the AQC. During the study period, use of the emergency department had decreased for both groups of patients, with no statistical difference between the two.


The findings should reassure critics of global payment systems like the Alternative Quality Contract that such models do not lead to rationing of necessary emergency services. Where the model did fall short—at least in the first year of the AQC—was in diverting patients with nonurgent needs, such as suture removal or medication refills, to seek care at primary care clinics and other lower-cost settings. The authors note that in the first year of the AQC, a five-year initiative, primary care physicians were not rewarded for reducing emergency department use.

Publication Details

Publication Date: January 31, 2014
Authors: Dana Gelb Safran, Michael Chernew, Adam L. Sharp, Zirui Song, and A. Mark Fendrick
Summary Writer: Naomi Freundlich

A. L. Sharp, Z. Song, D. G. Safran et al., “The Effect of Bundled Payment on Emergency Department Use: Alternative Quality Contract Effects After Year One,” Academic Emergency Medicine, Sept. 2013 20(9):961–64.

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Health Care Delivery

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