The state’s Group Insurance Commission issued a request for proposals on Wednesday that is expected to change the way its 400,000 members are insured and to cut expenses by nearly $1.3 billion over the life of the five-year contract.

The GIC said it is adopting a new purchasing model that will shift more risk on to insurance carriers and health providers, requiring them to stay within budget targets on a per-member per-year basis. Carriers who stay below those targets will be able to pocket the savings, while those who exceed the targets will pay penalties. The agency said it expects care to improve and benefits to remain the same under the new system.

While such an approach would have been challenging to implement in the recent past, it is now not only a viable strategy, but one whose time has come,” the commission said in its RFP. “It is the single strategy with the best chance of bending the GIC’s cost curve for the long haul.”

The $6.5 billion contract will start in fiscal year 2014. The RFP said carriers will be required to guarantee that the commission’s per-member per-year costs will not rise in FY16 compared to FY15 and will start decreasing in each of the remaining years of the contract.