New Goals, New Alliances
Qualify for a free subscription to HealthLeaders magazine.
Chuck Lehn, Banner Health Network's CEO, agrees that a lot of work still needs to be done for the partnership ACO with Aetna to operate most efficiently, and echoes his clinical colleague, Decker, about the constant learning that is going on among physicians as they transition to a completely different method of evaluating their value to the organization, from revenue generation to quality and efficiency.
"We're still learning how to integrate cost information with clinical information," Lehn says. "The link between cost and quality is an emerging science."
But Decker sees evidence of uptake among physicians, saying that, very slowly, they are starting to talk among themselves about how much the things that they do cost. "The leader is often the doctor who spends less," he says. "That never used to be the language 15 years ago, but now you hear it once a week."
And Lehn says the level of transparency around the data doctors use to compare themselves against their peers is improving dramatically. "If you're sharing risk, then everyone has to understand what's driving the costs and where the costs are."
Banner has finalized another ACO deal with UnitedHealthcare, Lehn says. The organizations have worked together for years, but this is the first accountable care program for the two, and it will become effective July 1. Part of the difficulty in negotiations for such partnerships is that both sides have to come to agreement on historical cost trends, because the health system will be rewarded for how they mitigate the increase in those trends going forward.
Moving toward capitation, narrow networks
What all of these complex moving parts, culture transformation, and big data integration are leading to ultimately can be boiled down to one word: capitation. But the transformation to that type of payment, in which a provider negotiates a per member, per month fee for taking on a patient's medical risk, is filled with baby steps in order to successfully make such a dramatic transition. So hybrids will continue to move the dial toward capitation in the meantime.
Cigna's Salmon says providers currently are most comfortable with an upside shared-savings model in negotiations, as 90% of Cigna's patients are still in open-access PPO plans. Shared-savings regimes of one kind or another are common, but the insurer plans to progress over several years to models that also share downside risk.
"Eventually we'll move toward capitation models, which we already have with our Medicare Advantage and managed care population in California," he says.
Aetna's Kennedy contends narrow networks (sometimes these are also called ACOs, adding to confusion) are proliferating widely because of the strong economic incentives to create them. This is one reason Aetna finds it can play an important role in creating accountability for financial and quality outcomes that are so important in switching the business model from volume to value.
"In the PPO world, in broad networks it's very challenging to create financial accountability," he says. If anyone can go anywhere anytime for service, it's difficult to hold hospitals accountable for their performance on a certain group of members."
He says Aetna typically surrounds the narrow network with the "normal" Aetna PPO network so that in special cases where the narrow network does not have the capability the patient needs, he or she can still get access.
"This harnesses the power of a narrow network of 10,000–20,000 members. Here's the network they're attributed to so we can more easily hold physicians accountable for their clinical and financial performance," says Kennedy. "People should not walk away with the perception that they don't have access in an uncommon or severe health event. This is more of a tiering network strategy."
Strategic diversification = less cooperation?
All of this activity doesn't guarantee that payers and providers will always be able to work effectively in a collaborative manner. Some organizations may feel they need to control as much of the healthcare continuum as possible to make the transformation work in their favor.
With that in mind, some health plans have been acquiring providers and even hospitals. Likewise, some hospitals have acquired or are planning to resurrect their own health plans—plans that may have been jettisoned years ago as they proved largely unable to compete with large national insurance companies like Cigna, Aetna, WellPoint, UnitedHealthcare, and state Blue Cross and Blue Shield plans.
But is this kind of branching out a good idea strategically? Cigna's Salmon is skeptical of such incursions.
"It's actually quite complicated to run an integrated delivery system. It's also hugely complicated and sophisticated to run a health plan," he says. "We don't underestimate the skills necessary for running an IDS, so they shouldn't underestimate the skills to effectively run a health plan."
He believes Cigna's branded health plan partnerships with medical groups, for example, may offer as good a return, ultimately, with less risk for providers.
"In Texas, we have Kelsey Care powered by Cigna," he says, mentioning a branded health plan in partnership with Kelsey-Seybold Clinic, one of Houston's largest physician practices. Cigna also has high-performing collaborative accountable care groups in 11 markets. "The groups that are doing that need a mechanism to capture patient volume, and we can help them," he says.
Aetna's Kennedy is somewhat less pessimistic about such crossover, but he still feels organizations are best served sticking to their core competencies. He says many provider groups, which already understand how to deliver healthcare exceptionally well, might figure that if they're already taking risk through an ACO or multiple ACOs, that it couldn't be much more work to simply become a full-fledged health plan.
- 'Mega Boards' Could be Rural Healthcare Disruptor
- 1 in 5 Eligible Hospitals Penalized for HACs
- HL20: Rebecca Katz—Cooking Up Sustainable Nourishment
- Meaningful Use Payment Adjustments Begin
- HL20: Peter Semczuk, DDS, MPH—Taking on the Big Challenges
- PA hospital to pay $662,000 to settle Medicare fraud case
- Supreme Court to hear Obamacare subsidy challenge in March
- Dr. Oz gets fact-checked and the results aren't pretty
- How the high cost of medical care is affecting Americans
- HL20: Lee Aase—Who's Behind @MayoClinic