Insurers seek to financially reward hospitals and medical groups for coordinating and delivering patient care in a way that both lowers medical costs and improves health. Participating hospitals and physicians agree to become responsible for the quality, cost and care of a patient population, such as health-plan members, and would share in the savings if they meet cost and health goals.
The term for health-care provider groups participating in such programs may not be catchy, but the concept of "accountable care organizations" is drawing attention from major managed-care companies, health providers and the government. The movement toward ACO models is in its early stages and gaining steam.
Insurers are testing various ACO models with medical groups and health systems around the country. The government plans to issue proposed regulations in January for a related shared-savings program covering traditional Medicare beneficiaries, effective 2012, and these rules are expected to influence the private health insurers' arrangements with ACOs treating their commercial customers.
"Everybody's kind of in the development stages and testing how well these models will do," said Brett Hickman, partner at consultant PricewaterhouseCoopers, who sees the possibility of 350 ACOs nationally in five years or more.
"We feel there is an affordability crisis and accountable care organizations (are) one avenue that we are exploring," said Colin Drozdowski, a vice president at WellPoint Inc. ( WLP ), the largest U.S. managed-care company by membership. Even if the government wasn't encouraging ACOs, as the health overhaul does, "we would continue down that path simply because we believe we have to pursue those alternatives," he said. "This is an unproven and untested model."
In a recent letter to Medicare's administrator on the forthcoming rules, the California Association of Physician Groups called ACOs "a critical aspect of reforming" a system that rewards providers for quantity rather than quality.
With ACOs, which could take various forms, providers have financial incentives to follow certain care protocols, achieve targeted health results and meet cost goals. They might reach these objectives by boosting use of generics, reducing unnecessary procedures and improving coordinated management of patients with diabetes and other costly chronic conditions. The exchange of patient records and other data through electronic means is considered key to ACO operations.
Insurers started ACO pilots in recent years.
Three years ago, Aetna Inc. ( AET ) started testing a model among doctors who cared for 20,000 of its Medicare Advantage plan members, using nurse case managers to help coordinate care and manage patients' conditions. The use of personal health records as a tracking tool alerted providers to gaps in patient care, according to the insurer. Aetna said its data suggest the model has decreased duplicate or unnecessary services and improved patient health.
"Physicians and facilities earned additional payments for meeting certain quality measures that helped patients stay healthier so they can avoid more extensive care," said Dr. Randy Krakauer, Aetna's national Medicare medical director. Aetna is working with providers to form a range of ACO models, including those for patients in its commercial health plans.
In November, WellPoint's Anthem Blue Cross and Blue Shield plan in New Hampshire announced a collaboration with Dartmouth-Hitchcock Health, the state's largest health provider, that could lead to formation of an ACO.
Cigna Corp. ( CI ), which has ACO pilots with Dartmouth-Hitchcock and six other partners, started its first in 2008. Each ACO has hired a nurse considered an "embedded care coordinator" who electronically receives data from Cigna indicating where patients are not receiving the care indicated by evidence-based guidelines, said Dr. Dick Salmon, a Cigna medical director. There have been no rewards to providers yet, Salmon said, as the organizations are not mature enough, but studies show they are headed in the right direction.
"We certainly see this growing. Things are changing so fast it's very hard to predict the pace of growth," Salmon said.
The nonprofit Blue Shield of California collaborated with two Sacramento provider networks to form an ACO for California Public Employees' Retirement System members, who can choose the lower-premium ACO plan or more traditional coverage. The plan promised CalPERS no increase in medical costs the first year--a $15 million risk for Blue Shield and the providers.
Through September, the ACO had saved a little more than $15 million, Blue Shield executive Juan Davila said. The ACO saw lower readmissions and shorter hospital stays, cut duplicative procedures, increased use of generic drugs, improved discharge procedures, and kept patients more compliant with care and in the network, he said.
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