Reprinted from AIS’s VALUE-BASED CARE NEWS, a hard-hitting
monthly newsletter with news and business strategies on ACOs, medical homes,
bundled payments, coordinated care and global payments.
By Jane
Anderson, Editor
August 2015 Volume
6 Issue 8
With massive consolidation on the
horizon for large health insurers (see story, p. 1), both provider groups and
payers are anticipating an even stronger push toward value-based payments in
commercial contracts.
And as those value-based contracts
evolve, they’re more likely to move away from the upside-only shared savings
agreements that are commonplace today, and toward new arrangements that push
more risk — including downside risk — onto providers, industry stakeholders
told attendees on June 16 at the Accountable Care Organization Summit in
Washington, D.C., sponsored by Global Health Care, LLC.
“A lot of payers are experimenting,”
said David Muhlestein, senior director of research and development at Leavitt
Partners LLC. “On the commercial side, provider arrangements are more flexible.
They might start with creating a patient-centered medical home and providing
care management fees, or start paying for [providers to collect] quality measures.
Over time, they move up the risk spectrum.”
According to Leavitt’s data, private
payers have about 14 million people enrolled in accountable care, while
Medicare has 7.8 million and Medicaid has 1.7 million lives in accountable
care.
ACO growth “initially was really being
driven by the commercial space — before MSSP [the Medicare Shared Savings
Program],” Muhlestein said.
Now, Leavitt Partners counts about 528
commercial contracts and 523 government ACO contracts, he said. “It’s about the
same number of contracts, but commercial ACOs tend to be much larger,” so there
are many more members enrolled in commercial ACOs than in Medicare and Medicaid
ACOs.
There are 136 different payers — both
government and commercial — who have ACO contracts. Of these, three have 51 or
more contracts (one of these is CMS), and three more have between 21 and 50
contracts, Muhlestein said. Most — 81 payers — have just one contract, and 19
have just two contracts in force.
About 30% of Aetna’s contracts are in
value-based pacts currently, Charles Saunders, M.D., CEO of Health-agen, an
Aetna Inc. subsidiary, told conference attendees.
Saunders, who spoke before the proposed
Aetna-Humana Inc. merger was unveiled, predicted the number of contracts in
value-based payments would grow substantially and rapidly for Aetna. “At five
years [from now], 15% of our network will be capitated, and 70% will be in some
sort of value-based reimbursement. A small percentage of the marketplace will
be in care bundles, and a very small percentage will be in percentage of
premiums, participating in underwriting margin as provider-owned health plans
or joint ventures.”
With Aetna and other large health
insurers moving this fast into value, close relationships between provider
groups and commercial payers are important, said D. Keith Fernandez, M.D.,
president and physician-in-chief for Memorial Hermann Physician Network and
chief medical officer for Memorial Hermann ACO in Houston.
ACO Attributes Success to Aetna
Memorial Hermann ACO saved nearly $60
million for CMS during the first reporting period for the MSSP, earning a
shared savings payout of about $30 million. But Fernandez told conference
attendees that much of the ACO’s success as an ACO is “directly related to our
relationship with Aetna,” which was the first commercial payer to approach
Memorial Hermann about value-based payments. The Aetna-Memorial Hermann ACO
took about a year of planning and opened its doors in January 2013.
“With Aetna, we have this great
partner. Every week, we’re talking to Aetna. When we look at how we interact
with them, it just looks like one group of people trying to solve problems,” he
said.
The ACO ultimately took what it learned
from its pact with Aetna and used it to become successful in MSSP, which it
actually joined in July 2012, before the Aetna deal formally launched,
Fernandez said.
He added that he anticipates similar
stellar financial results from the second MSSP reporting period later this
year.
H. Scott Sarran, M.D., divisional
senior vice president and chief medical officer, government programs, for
Health Care Service Corp., said commercial payers such as HCSC need to deploy
increasingly innovative products that are attractive and affordable enough to
win customers.
Provider partners, he said, can help
moderate price increases, create predictable pricing and facilitate price
stability over time, all of which are critical in an environment where
employers — both large and small — are demanding the option of lower-cost
products.
“Do ACOs in and of themselves get us
there? The answer is, probably not,” Sarran said. “The value created purely by
the ACO contract, absent any other benefit design changes, is not sufficient to
create the end stage we all want. There are a variety of ways to do that with
benefit design and network design strategies.”
Right now, Sarran said, HCSC has about
35% of its provider payments in value-based contracts, which is “enough to
cause some focused attention” but not enough to truly drive change. “It’s not
enough to optimize products — we need to shoot for a tipping point of 50% or
greater” in value-based contracts, he said.
Advocate: Narrower Networks Are Coming
Dana Gilbert, COO of Advocate Physician
Partners in Chicago, noted that Advocate has contracts for ACO-style shared
savings — both one- and two-sided risk — plus global capitation contracts. Its
commercial ACO shared savings contracts are delivering results that are about
2% below trend, he told ACO Summit attendees.
Gilbert said that success in the
commercial ACO space ultimately will involve a move toward narrower networks
“where there is a primary care physician selected and the member knows they’re
a part of this product.”
Narrow network products are “really the
kind of product you need to do to get the significant changes in health care
costs I think people are really looking to see, and that the payers in health
care are really expecting,” he said.
Creating these types of narrow network
products will allow fully capitated ACOs to sell their own branded products
directly on the exchanges, Saunders said. “Even when we do partnerships with
health systems, we tend to subordinate our own brand to theirs. To a buyer, a
narrow network’s not a narrow network if your doctor is in it.”
To that end, he said, payers and
providers need to clearly distinguish between narrow networks chosen for their
performance — like ACO-based networks — and narrow networks formed solely on
the basis of the lowest unit price possible.
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