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ACO or Not, Fairview Builds Shared Savings into All Payer Contracts

 |  By Philip Betbeze  
   May 23, 2011

No matter how much senior healthcare executives might discount the government's ideas and regulations surrounding accountable care organizations, the fact that care can be provided more efficiently and at less cost is undisputable. But that doesn't mean you have to follow a Centers for Medicare & Medicaid Services-approved recipe to get there.

For skeptics, there's Fairview Health Services in Minneapolis. Leaders at the system knew, based on quality metrics, that it provided the highest quality care in the region, says Dave Moen, MD, the president of Fairview Physician Associates, the health system's physician alignment division. But the system isn't concerned with what acronym is used to describe its demonstration of value to its patients and payers. The big question was how to get paid for it.

"We had the highest quality and the lowest cost in the area," he said, relating that negotiations on a new contract between Fairview's CEO and his counterpart from Medica, a 1.6-million member health plan based in Minnesota, had reached a standstill.

Rounds Webcast: Coordinating Systems of Care  Order  today.

To their credit, the two didn't result to sniping at each other through the media. Instead, they changed the conversation.

What came out of it was a $10 million incentive, combined with a shared savings mechanism aimed at cutting costs and improving quality in the new contract between the two organizations. Fairview wasn't content to stop with one payer contract, however. It pushed for the model to be included in all its contracts with payers.

"We took that model for shared savings and quality and gradually embedded the concepts into all of its commercial insurance contracts," said Moen, starting in January of this year. "It covers all lives associated with that payer, but there are some outlier provisions."

Clinically the shared savings model has already demonstrated improved outcomes in managing diabetes, hypertension, and cardiovascular disease, says Moen.

He is optimistic that key components of the commercial contracts would work well in a Medicare or even a state Medicaid shared savings model. Fairview leadership presented the model to CMS, and is hopeful that components can be included in the so-called "Pioneer" track unveiled by CMS last week.

"It's not perfectly aligned, but directionally it's going the same way," Moen says.

Rounds Webcast: Coordinating Systems of Care  Order today.

Many health systems are building coordinated "systems of care" that mimic or parallel certain aspects of the vision behind Medicare Shared Savings. La Crosse, Wisconsin-based Gundersen Lutheran Health System has been rated among the "best values" in all Medicare regions by achieving higher quality and lower cost through a combination of physician leadership and governance, IT investment, integrated delivery and a focus on not-for-profit culture, says CEO Jeff Thompson, MD.

Gundersen's care coordination program has been able to reduce inpatient charges of the sickest 1% of patients from more than $18 million to less than $8 million in three years. The program cares for patients regardless of risk status, whether they are part of the Gundersen's plan or fee-for-service, Thompson says.

Building the blocks for coordinated, high-value systems of care will be the focus for Thompson and Moen next month as they are both among the panel of presenters at the HealthLeaders Media's Rounds event live from Gundersen Lutheran Health System, on June 9. Both will present their lessons and strategies and be available for live feedback during a virtual Q&A session.


Philip Betbeze is the senior leadership editor at HealthLeaders.

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