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Aetna, Carilion Clinic Building ACO in VA

 |  By John Commins  
   March 11, 2011

Aetna and Roanoke, VA-based not-for-profit Carilion Clinic said this week they are collaborating to build an accountable care organization in southwest Virginia that will feature co-branded insurance plans for individuals and businesses.

Carilion CEO Edward G. Murphy, MD, told HealthLeaders Media Thursday that the collaboration was the logical next step for the health system because "we realized there was only so far you could go being a provider alone and deliver the kind of value that you want for the community."

"It became increasingly apparent to us that you needed a fundamentally different relationship with payersand be a partner in this regard," he says. "You have to think about what you and they bring to the table as being complementary and not adversarial and trying to jointly provide services and value to patients in common."

The Aetna-Carilion collaboration is expected to include co-branded commercial healthcare plans for businesses and individuals later this year, and new payment models that encourage providers to share accountability to improve patients' health, including rewards for meeting quality targets and shared costs savings, Aetna and Carilion said in a joint statement.

Carilion Clinic will continue to offer Medicare Advantage products and will buy administrative services through Hartford, CT-based Aetna to lower administrative costs. Aetna will become the administrator of Carilion's health benefits plan for its employees.

"Carilion Clinic would be the ACO, but the ACO needs a contracting vehicle and an insurance payment vehicle and that would be Aetna," Murphy says. "You will see co-branded insurance products with Aetna so we can bring insurance product to commercial market here that would carry Aetna's name and Carilion's name."

Murphy says Aetna would likely "begin taking over the back room management" for Medicare Advantage next month, and begin an open enrollment on July 1 for Carilion's 17,000 or so employees and dependents. Phase in for the commercial market and Medicaid are targeted for completion by the end of the year.

Charles Saunders, MD, president of Strategic Diversification at Aetna, said in a statement that the "collaboration is designed to bring new models of healthcare delivery, advanced technology and payment reform to the market that creates improvements in both quality and affordability of care. By bringing the best capabilities of each organization and aligning incentives across all stakeholders, we can create real value."

ACOs are a high priority for healthcare leaders. Seventy-four percent of hospital chief executives surveyed for the HealthLeaders Media Industry Survey 2011said they either already have the components in place to be considered an accountable care organization or that they will within the next five years.

Carilion's ACO features an integrated electronic medical record to support information sharing and a network of primary care physicians, specialists, hospitals and outpatient facilities.Aetna members using Carilion can access Aetna's online resources including pricing and quality, and wellness tools

 "Aetna is exploring new ways to work with healthcare providers, and we've found that these discussions are positively received as we collectively seek to improve the healthcare system," said Thomas Grote, president of Aetna's Maryland, Virginia and Washington, D.C., markets. "Our arrangement with Carilion will provide a foundation to grow these new models of care." 

Murphy says Carilion physicians and facilities will continue to participate in existing health plan provider networks and will accept members from Aetna and other private plans.

He says the relationship with Aetna should not hinder business with other health plans. "Certainly we will continue to contract with other insurance companies, and we need to, but our relationship with Aetna will allow us to provider broader array of services at lower costs," he says.

He says the collaborative won't stifle access for other insurers. "This was not an exclusive contract. We talked with other insurers about doing this but we got to the finish line with Aetna," he says. "It's another layer of competition that brings new products to the market that are in everybody's interest."

"If we were to tell all the other insurance companies that now we only deal exclusively with our own insurance product and that we would not be willing to continue having a contract with United or BlueCross that might be a different story," he says. "But we are not going to allow these contracts to get between us and our patients. Patient choice prevails and we are here to take care of our patients.

John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.

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