Government sponsored pay-for-performance systems (P4P) have emerged in many contexts, including those featuring third-party federalism such as Medicaid. In this vein, voluntary networks called Medicaid accountable care organizations (ACOs) seek to achieve health care savings while boosting the quality of care. Drawing on evidence from four states, this study probes how collaborative governance strategies that downplay formal democratic controls and enhance administrative flexibility shaped the response to two implementation problems. We find that administrative flexibility, combined with signals of support from political principals, helped galvanize ACO formation but undermined efforts to tailor performance metrics to the needs of Medicaid enrollees.
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