Last year, all of healthcare was abuzz over accountable care organizations (ACOs). This year, the new fad seems to be tearing the concept apart before it even has a chance to develop.
But criticisms of accountable care hinge on a false premise – that the only way to become accountable for care is to contract for shared savings with the Centers for Medicare & Medicaid Services (CMS). The reality is that there are many markets for providers to evaluate as they begin the journey toward more coordinated, accountable care, and a variety of partnerships and strategies that can be deployed to get there.
Based on our assessments of "ACO readiness" in 90 markets, it is clear there are at least six additional populations to target beyond Medicare.
1. Your own employee health plan. The first place to look is in the mirror. Most health systems and large hospitals are self-insured, providing an opportunity to experiment with insured employees. This provides a "learning laboratory" that will help minimize risk when assuming accountability for additional populations.
Like other employers, health systems are already using incentives to promote healthy behavior among employees, like losing weight. Some health systems such as the Cleveland Clinic are no longer hiring smokers. They are also encouraging employees with chronic illness to enroll in disease management programs and designing benefits to reward employees for taking cost-saving measures, such as using generic drugs.
2. Self-funded employers. Self-insured employers are ripe for turning to ACOs to provide their care. In one East coast market, a self-funded employer is implementing the Medicare shared savings model for their employee health plan with a handful of health systems.
The employer's approach is novel. It projected spending on a per-capita basis and made an agreement with partnering health systems that if spending came in under the target in 2011, it would split the savings with them. There is no penalty for falling short of the target.
3. Health plans/insurers. Shared savings models are not exclusive to self-funded plans. Insurers are beginning to enter into these agreements with health systems as an insurance product. Several throughout the country already have been announced, including:
- Aetna and the Carillion Clinic
- Humana and Norton Healthcare health system
- CIGNA and Piedmont Medical Group
- Three major Minnesota insurers and Fairview Health Services
The rewards for meeting quality standards and cost reductions include bonus payments and shared savings to the provider network.
4. Medicaid. Community Care of North Carolina places a significant emphasis on medical homes, primary care, and disease management. Primary care physicians are paid fees for their services, plus a $3-5 management fee per member, per month for coordinating care.
There are also incentives for practices to meet quality targets and a shared savings program for primary care physicians. Other states, such as Alabama, are adopting similar models and incentive systems to manage and deliver care.
5. The uninsured. The Camden (NJ) Coalition of Healthcare Providers uses care management programs for the uninsured and is putting accountable care principles to work for some of its most fragile citizens. A citywide project targets residents with both complex medical conditions and social issues—the same individuals who overuse emergency departments and hospitals. Coalition members, such as social workers, outreach workers and nurses, help patients stabilize their social environments and manage their health conditions. The result has been a significant reduction in healthcare costs.
6. Individuals. Frustrated by increasing premiums, business leaders are backing away from employer-sponsored health plans. Instead, they are giving employees lump sums to purchase health insurance directly. In states such as Massachusetts, individuals are purchasing insurance through an exchange, buying policies with deductibles and benefits that suit them.
Succeeding in the individual market will depend on finding the right payer that is willing to design products for individuals, and partner to help manage care. To keep costs down, it will be essential to include effective care and chronic disease management programs into the benefits package.
One of the most significant lessons learned from our assessments is to think broadly. Many people have compared ACOs to unicorns, a creature that has magical powers but one that no one has ever seen. Across the country, health systems, insurers and governments are putting new systems in place that are beginning to show us what accountable care might look like. Applying accountable care principles beyond the Medicare market is essential if this country is going to reverse the out-of-control healthcare costs that threaten our fiscal health. The momentum is building across both the private and government sectors—even before Medicare ACOs become a reality.
Joseph F. Damore, FACHE, is vice president, Premier Consulting Solutions, in Washington, DC. Barbara Gray is vice president, Premier healthcare alliance's Partnership for Accelerated Care Transformation, in Charlotte, NC.