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5 Commercial ACO Tricks of the Trade

 |  By Margaret@example.com  
   July 17, 2013

Commercial accountable care organizations make strange bedfellows out of payers and providers. Accustomed to hardball contracting negotiations, payers and providers find the transition from adversary to partner an uneasy one. These tips can help.

Although the government version of the accountable care organization has certainly had some recent growing pains, commercial payers such as Aetna, Cigna, and UnitedHealthcare have been busy adapting the government model into a more flexible effort that appeals to a wide range of providers.

Commercial ACOs make strange bedfellows out of payers and providers. Accustomed to hardball contracting negotiations, payers and providers now find themselves joining forces to form and sustain ACOs.

Although there are hundreds of commercial ACOs forming cross the country, the transition from adversary to partner is not often an easy one.

Last month Premier Inc., the Charlotte-based healthcare alliance, hosted a press conference and presentation by two of its ACO collaborative participants—one just getting off the ground and one more experienced. Rob Slattery, president and CEO of Integrated Solutions Health Network in Johnson City, TN and Andy McCoy, vice president of revenue management for Minneapolis-based Fairview Health Services each offered some tricks of the ACO trade in terms of payer-provider partnerships.

They detailed the value of payers, who bring money, data, modeling, and benefits to ACO partnerships:

Big investment
Slattery and McCoy each noted the significant costs involved in building the infrastructure necessary to transition to ACOs. The American Hospital Association places the cost at $1.7 million to $12 million to develop the infrastructure and resources needed, including information technology, care management programs, and patient-centered medical homes. Aetna, which is developing a national ACO network, has earmarked about $1 billion to help providers develop ACOs.

Claims data
ACOs need to manage claims data to identify and monitor key populations, especially individuals with chronic diseases. Payers have a gold mine of data to help providers manage care and the healthcare services being used.

Predictive modeling
Payers can provide the population health analytics critical to targeting services and establishing performance targets. This information is critical to being able to meet the patient quality and outcome standards that measure the value of care.

Value-based benefits
Payers can support benefit designs that encourage healthy living, such as smoking cessation. Although the value of wellness programs has been questioned, healthcare reform requirements are designed to shift the wellness focus from a marketing orientation to value and outcome-based programs, such as free preventive health screenings and reduced copayments for maintenance medications.

What are providers doing sustain a successful payer partnership? Here's a look at how Integrated Solutions Health Network and Fairview Health Services have taken the plunge:

1.Develop a vision
To transform payer relationships and the delivery of healthcare requires taking the long view. ISHN is developing its ACO as part of Mountain States Health Alliance, a 13-hospital system based in Johnson City, TN. Mountain States, developed a 10-year strategy plan to meet operational cost objectives, build its technology infrastructure, and enhance relationships to support a value-based business model.

2.Align to the Triple Aim
Mountain States uses a model that aligns aspects of the Triple Aim with measureable components. Affordability includes total cost of care, utilization, and pharmacy services; patient satisfaction includes access to care, safety, and customer service; health outcomes includes managing health risks, case managers, and living with illness. "This really is our guide is implementing our 10-year plan," explains Slattery.

3.Establish/redesign relationships with payer partners
Shifting a payer relationship from volume (fee-for-service) to a value-based model is risky. Fairview Health Services, a seven-hospital system in Minneapolis, began small about 10 years ago. Its first risk contract was a shared risk Medicare Advantage contract with UCare, a non-profit health plan.

In 2009 Fairview began a commercial ACO contract with Medica, the second largest health plan in its market. Fairview Health joined the Pioneer ACO program in 2012. That same year it began setting up new relationships with health plans that involve limited network products.

Over the years, Fairview has expanded its payment models to include pay-for-performance with commercial payers and gain sharing with the Minnesota Medicaid program. Today it has more than 306,000 risk-based members that account for 60% of Fairview Health Services patient revenue

4.Get the information you need
A successful payer-provider relationship requires the exchange of a lot of data. Unfortunately payers may have different levels of capabilities. McCoy explains that Fairview's payers have invested varying amounts of their resources into the creation of their analytic capabilities to help identify at-risk members and cost variations so we can "identify potential areas of improvement."

Fairview has begun to implement payer penalties for non-performance in providing timely data with enough actionable detail. "Payers may have different priorities we are beginning to build this penalty into our contracts."

5.Avoid overlapping duties
For years health plans have performed some level of disease/care management. Providers are now taking on that function and as a result some overlapping may occur. McCoy says it is important to coordinate to make sure resources are used in the areas where "we'll have the most success impacting member care."

The payer-provider ACO partnership holds the promise of improving population health and lowering healthcare costs. It is a difficult proposition but both sides have developed insight into the systemic changes necessary to succeed. Sharing the information is part of the process.

Margaret Dick Tocknell is a reporter/editor with HealthLeaders Media.
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