Aetna Building National ACO Network

This article appears in the May 2012 issue of HealthLeaders magazine.

Aetna Inc. is developing commercial ACO and ACO-like relationships with several providers. The company has 10 agreements in place and expects to have a total of 20 under contract by the end of 2012, says Charles D. Kennedy, MD, CEO of aligned care solutions for Aetna.

The ACOs are each centered on a healthcare delivery system, hospital, or integrated delivery network. The program is in its infancy—it's been in the works for about four years but just began contracting in 2011. The diversified healthcare benefits company wants to develop a national ACO network over the next five years.

Aetna is investing in excess of $1 billion in a variety of capabilities to support its ACO business, including last year's acquisition of Medicity, a health information exchange technology company.

Kennedy is straightforward when asked why Aetna is developing this business line. "What we get out of this arrangement is growth. Health plans are in a low-margin, high-volume business. What they get is a business partner that can help them improve their margins, improve their market share, and improve the quality of care that they provide."

He adds that Aetna wants to shift the traditional payer-provider relationship from rate-based to value-added-based. "The traditional payer-provider rate fights led to relationships without synergy because they were just based on contract discounts." Aetna's ACO program is based on aligning incentives such as shared savings so all parties are looking for opportunities to add value to the relationship and provide better patient care.

Aetna has profiled delivery systems across the country to identify which are likely to be successful in forming and operating an ACO. Aetna looks at a host of metrics, including typical considerations such as the size of the system or medical group and its patient volume, clinical utilization and outcomes, and patient mix. It also looks at the mix and size of the employer community and assesses the interest level of the insurance agent and broker community in an ACO product.

Culture and leadership also play a role in the assessment. "The ACO concept requires change. Some organizations are ready to embrace change and others are not," says Kennedy. He notes that filling hospital beds was once a sign of success and increased revenue. "In this new model, filling your beds may be a bad thing. It could mean you aren't doing a good job managing readmissions or coordinating care."

Existing Aetna contracts include Carilion Clinic (Roanoke, Va.), Banner Health  Network (Phoenix), Sharp Community Medical Group (San Diego), Heartland Health (St. Joseph, Mo.), Emory Healthcare (Atlanta), and Cleveland Clinic (Cleveland). The relationships range from a collaboration that involves only Medicare patients, to cobranded health plans and new payment models with shared savings for meeting quality and clinical targets. Some of the arrangements have elements of ACO agreements but are not full ACO models at this time. In some cases, Kennedy and his team are helping put the processes in place to move toward ACOs.

Aetna is taking several approaches to structuring these ACO relationships:

• Support for clinical integration. If it isn't in place already, Aetna helps establish a clinically integrated model and helps implement a workflow process and management structure to clinically integrate. Among the expected outcomes: improved work load across the care team and real-time access to claims and utilization data.
   
• Defined population management. This is case management for Medicare Advantage, Medicaid, or commercial members. Kennedy says this can be a beginning step for a healthcare delivery system that doesn't want to leap into an ACO but is interested in financial incentives that are consistent with care coordination and quality programs. Among the expected outcomes: lower utilization of healthcare resources and reduced hospital readmissions.
   
• Private label health plans. Here, Aetna handles the back-office functions of claims processing, customer service, call center, and care management. Hospitals or physicians can use this to strengthen brand awareness. "It's their product, their brand, and their revenue," explains Kennedy. "They have complete end-to-end transparency as to when they improve efficiencies within their hospital or practice, and how that converts to a price point improvement versus their competition." Among the expected outcomes: a more diversified revenue mix and improved management of population outcomes.

The length of the typical ACO contract will vary depending on how much progress the delivery system has made in clinical integration and accepting risk. "For a delivery system with no clinical integration in place, we might look at a contract that runs five years or more because it's going to take a while to get everything lined up, make the governance changes, and deploy the technology."

Aetna is not looking to develop exclusive relationships with the providers. Kennedy explains that providers can't be expected to make a big investment in the technology and other systems and then only use them on a subset of their patients. "For many of our products and services, we offer them on an all-patient/all-payer basis because that's the only way to get the work flow to make sense. A provider isn't going to design one work-flow system for Aetna patients, another for Blues patients, and then another for their Medicare patients."

He says it's too early to see results from these relationships but that the response to the business model has been positive. "One surprise for us is that some national account customers with employees in Roanoke are carving out their healthcare insurance business in the area so they can send their employees specifically to Carilion."

This article appears in the May 2012 issue of HealthLeaders magazine.