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Private-Payer Innovation in Massachusetts: The "Alternative Quality Contract"

In 2009, Blue Cross Blue Shield of Massachusetts began paying participating health care provider groups under the Alternative Quality Contract, an alternative to fee-for-service payment in which medical groups receive fixed payments for patient care, plus rewards based on savings generated and performance targets reached. In a study published in the January issue of Health Affairs, Commonwealth Fund–supported researchers found that, at the end of the first year of the contract, spending in all participating groups was below the budget targets and all earned "significant" quality bonuses.

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