Early experience with a new model of employer group purchasing in Minnesota

The Buyers Health Care Action Group (BHCAG) in the Twin Cities has implemented a new purchasing initiative that offers employees a choice among care systems with nonoverlapping networks of primary care providers. These systems offer a standardized benefit package, submit annual bids, and are paid on a risk-adjusted basis, Employees are provided with information on quality and other differences among systems, and most have financial incentives to choose lower-cost systems. Generally, providers have responded favorably to direct contracting and to risk-adjusted payments but have concerns about the risk-adjustment mechanism used and, more importantly, the strength of employers' commitment to the purchasing model.