Monday, August 31, 2015

6 Things to Know about 2014 MSSP ACO Performance

1.    Ninety-two Shared Savings Program ACOs held spending $806 million below their targets and earned performance payments of more than $341 million as their share of program savings

2.    No MSSP ACOs owed CMS

3.    While total savings increased from 2013, the avg savings payments per MSSP ACO decreased ( $8.76 million per ACO in 2014 vs. $12.16 million in 2013

4.    An additional 89 ACOs reduced health care costs compared to their benchmark in 2014, but did not qualify for shared savings

5.    Among ACOs that entered the program in 2012, 37% generated shared savings, compared to 27% entering in 2013, and 19% entering in 2014

6.    Shared Savings Program ACOs that reported in both 2013 and 2014 improved on 27 of 33 quality measures

Source: CMS Fact Sheet, Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014

Primary Reasons For Remaining Uninsured (Ages 16-64)

1.    Tried to get insurance but it is to expensive- 36%

2.    Don't think the requirement applies- 14%

3.    Didn't know about the requirement to have health insurance- 13%

4.    Tried to get coverage but were unable- 12%

5.    Would rather pay the fine than pay for insurance- 7%

Source: Kaiser Family Foundation

2015 States with an Active Medicaid ACO Program

1.    Colorado

2.    Illinois

3.    Iowa

4.    Maine

5.    Minnesota

6.    New Jersey

7.    Oregon

8.    Utah

9.    Vermont

Source: Center for Health Care Strategies

82% of Obstetrics and Gynecology Physician Trainees are Women

Reuters Health recently published an article on the proportion of women and minorities in medical specialities using data from 2012. Here are some key findings from the report:

·         In 2012, 48% of medical school graduates were women and 15% were minority groups.

·         9% of practicing physicians in 2012 were underrepresented minorites, with 5% Hispanic and 4% black.

·         3 in 4 pediatrics physicican trainees were women in 2012.

·         82% of obstetrics and gynecology physician trainees were women.

·         Women accounted for 14% of orthopedics physician trainees.

·         Among Hispanic trainees, family medicine, OB/GYN, psychiatry, and pediatrics were top specialties.

Source: Reuters, August 24, 2015

74% of large employers plan to offer

...telehealth to employees in states where it is legal, according to a recent survey.

Source: "Health Care Benefits Cost Increases to Hold Steady in 2016, National Business Group on Health Survey Finds," National Business Group on Health Press Release, August 12, 2015,    

According to a recent survey of large employers,

, 48% of respondents expect at least one of their health benefit plans will hit the threshold that triggers the “Cadillac” excise tax under the Affordable Care Act in 2018, if they don’t take action.

Source: "Health Care Benefits Cost Increases to Hold Steady in 2016, National Business Group on Health Survey Finds," National Business Group on Health Press Release, August 12, 2015,

Thursday, August 27, 2015

Medicare ACOs Continue to Improve Quality of Care, Generate Shared Savings




August 25, 2015                                                                                                                          


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries



Medicare ACOs Continue to Improve Quality of Care, Generate Shared Savings


The Centers for Medicare & Medicaid Services today issued 2014 quality and financial performance results showing that Medicare Accountable Care Organizations (ACOs) continue to improve the quality of care for Medicare beneficiaries, while generating financial savings. As the number of Medicare beneficiaries served by ACOs continues to grow, these results suggest that ACOs are delivering higher quality care to more and more Medicare beneficiaries each year.


“These results show that accountable care organizations as a group are on the path towards transforming how care is provided," said CMS Acting Administrator Andy Slavitt. “Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending.”


ACOs are one way that the administration is working to provide Medicare beneficiaries with high-quality, person-centered care. Medicare ACOs are groups of doctors, hospitals, and other health care providers who voluntarily come together to provide coordinated care, with the goal of giving Medicare beneficiaries – especially the chronically ill – the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.


The results shared today demonstrate significant improvements in the quality of care ACOs are offering to Medicare beneficiaries. ACOs are judged on their performance on an array of meaningful metrics that assess the care they provide – including how highly patients rated their doctor, how well clinicians communicated, whether they screened for high blood pressure and tobacco use and cessation, and their use of Electronic Health Records. In the third performance year, Pioneer ACOs showed improvements in 28 of 33 quality measures and experienced average improvements of 3.6% across all quality measures. Shared Savings Program ACOs that reported quality measures in 2013 and 2014 improved on 27 of 33 quality measures.


When an ACO demonstrates that it has achieved high-quality care and effectively reducing spending of health care dollars above specified thresholds, it is able to share in the savings generated for Medicare. In 2014, 20 Pioneer and 333 Shared Savings Program ACOs generated more than $411 million in savings, which includes all ACOs savings and losses. Today’s results show that ACOs with more experience in the program tend to perform better over time. Of the 333 Shared Savings Program ACOs, 119 are in their first performance year in Track 1, which involves standing up the program without the financial risk associated with later tracks. Please see accompanying fact sheet for more details about percentages of ACOs that share in savings over time.


The number of beneficiaries served by ACOs is likely to continue to grow. Since the advent of the programs, the number of Medicare beneficiaries served by ACOs has consistently grown from year to year, and early indications suggest the number may grow again next year. The Shared Savings Program continues to receive strong interest from both new applicants seeking to join the program as well as from existing ACOs seeking to continue in the program for a second agreement period starting in 2016. Since passage of the Affordable Care Act, more than 420 Medicare ACOs have been established, serving more than 7.8 million Americans with Original Medicare as of January 1, 2015.


The Affordable Care Act takes important steps toward a more accessible, affordable, and higher-quality health care system. Today’s announcement is part of a broader effort to seize on this historic moment and transform our health care system into one that works better for the American people. We have a vision of a system that delivers better care, spends our dollars in a smarter way, and puts patients in the center of their care to keep them healthy.


For more detailed quality and financial results, click here.

CMS to Extend Initiative to Improve Care for Nursing Facility Residents



August 27, 2015                                                                                                                          


Contact: CMS Media Relations

(202) 690-6145 | CMS Media Inquiries


CMS to Extend Initiative to Improve Care for Nursing Facility Residents

Funding would allow testing of new payment model for nursing facility care

The Centers for Medicare & Medicaid Services (CMS) today announced a new funding opportunity designed to enhance the Initiative to Reduce Avoidable Hospitalizations among Nursing Facility Residents. The funding opportunity will allow the organizations currently participating in the Initiative to apply to test whether a new payment model for nursing facilities and practitioners will further reduce avoidable hospitalizations, lower combined Medicare and Medicaid spending, and improve the quality of care received by nursing facility residents.

For the past three years, CMS has partnered with seven Enhanced Care and Coordination Providers (ECCPs) to test a model to improve care for long-stay nursing facility residents. The ECCPs collaborate with 144 nursing facilities across seven states—Alabama, Indiana, Missouri, Nebraska, New York, Nevada, and Pennsylvania—to provide on-site staff for training, to provide preventive services, and to improve the assessment and management of medical conditions (see fact sheet).

The intent of the new payment model is to reduce avoidable hospitalizations by funding higher-intensity interventions in nursing facilities for residents who may otherwise be hospitalized upon an acute change in condition. Improving the capacity of nursing facilities to treat medical conditions as effectively as possible within the facility has the potential to improve the residents’ care experience at lower cost than a hospital admission. The model also includes payments to practitioners (i.e., physicians, nurse practitioners and physician assistants) similar to the payments they would receive for treating beneficiaries in a hospital. Practitioners would also receive new payments for engagement in multidisciplinary care planning activities.

“This Initiative has the potential to improve the care for the most frail, most vulnerable Medicare-Medicaid enrollees—long term residents of nursing facilities,” said Tim Engelhardt, Director of the Medicare Medicaid Coordination Office. “By aligning financial incentives, we can improve the quality of on-site care in nursing facilities and the assessment and management of conditions that too often now lead to unnecessary and costly hospitalizations.”

This new four-year payment phase of the Initiative, slated to begin October 2016, will be subject to a rigorous external evaluation to determine the effects on cost and quality of care. Successful ECCP applicants would implement the payment model with both their existing partner facilities, where they provide training and clinical interventions, and in a comparable number of newly recruited facilities.

The Initiative is a collaboration of the CMS Medicare-Medicaid Coordination Office and the Center for Medicare and Medicaid Innovation, both created by the Affordable Care Act to improve health care quality and reduce costs in the Medicare and Medicaid programs. The Initiative complements broader administration efforts to improve long term care facilities, including proposed updates to the conditions of participation for nursing homes, improvements to the five star rating system for consumers, and implementation of the new Skilled Nursing Facility Quality Reporting Program that ties skilled nursing facility payment to the reporting of quality measures.

283 Rural US Hospitals are in Danger of Closing

Pew Charitable Trusts recently published an article on the predicament of rural hospitals in the US. Here are some key findings from the report:

·         There are 2,322 rural hospitals in the U.S., with a majority in the Midwest and the South.

·         56 rural hospitals that have closed since 2010.

·         Currently, 283 rural hospitals are in danger of closing.

·         From 1983 to 1998, 440 rural hospitals closed in the U.S.

·         Rural hospitals have an average of 50 beds per hospital, compared to 234 at urban hospitals.

·         7 inpatients are served on average per day at rural hospitals, versus 102 at urban hospitals.

Source: Pew Charitable Trusts, August 17, 2015

According to a recent survey of large employers,

...some of the actions employers are taking for 2016 include:

  • About a third of employers will slightly increase the percentage of premiums that employees pay
  •  About a quarter of employers will increase deductibles slightly
  • 34% will impose surcharges for spouses who can obtain coverage through their own employer
  • 83% will offer a consumer-directed health plan (CDHP)
  • 33% will ONLY offer consumer-directed health plans (CDHPs)
  •  3% will move their active employees to a private exchange

Source: "Health Care Benefits Cost Increases to Hold Steady in 2016, National Business Group on Health Survey Finds," National Business Group on Health Press Release, August 12, 2015, 

Wednesday, August 26, 2015

Would You Believe Four New Health System-Owned MA Product Lines? Only in Maryland

By James Gutman - August 20, 2015

Maryland, where I reside, is a strange state in many ways, and especially when it comes to both Medicare Advantage (MA) and hospitals. In Medicare, managed care penetration has been dismal, with the most popular product not even really an MA one but instead a five-star-rated Kaiser Permanente cost plan. In hospitals, which by Maryland law have to be not-for-profit, the state until the beginning of last year had perhaps the tightest regulation of charges in the nation. Now, however, both of those things have changed dramatically, and the result may be an interesting experiment in what inroads providers can make in owning MA plans.

It all started coming to a head in January 2014, when Maryland hospitals began a five-year global-budgeting demonstration program with the backing of the CMS Center for Medicare and Medicaid Innovation. The hospitals, in effect, get a fixed amount of money to serve their Medicare population and thus are fully at risk if that costs more than they are paid. This gives them a powerful incentive to improve population health and manage care. And it therefore gives them a big reason to embrace MA as a way to get better data, gain access to CMS star-rating bonuses and make use of beneficiary and provider incentives.

The implications of this were not lost on the state’s hospitals, which even before that had begun forming themselves into major health systems. One is MedStar Health, which includes such well-regarded facilities as Georgetown University Hospital, and it began in 2013 with the help of the partly provider-owned Evolent Health advisory firm, to develop MA plans. By this year, it was up to about 8,000 MA members. This success was not lost on the other growing hospital alliances, including John Hopkins HealthCare, which intends to start owning MA plans next year, as reportedly does its biggest in-state rival, the University of Maryland Medical System (UMMS). Nor are smaller systems left out, as several of them this February launched Advanced Health Collaborative, LLC, which acknowledges that it may launch MA products on behalf of some or all of its members in 2016 or 2017.

But it gets more interesting. Hopkins and UMMS, which are clear competitors albeit not of the “Hatfields-and-McCoys” variety like Pittsburgh-based Highmark Health and UPMC (which perhaps coincidentally is a joint-venture partner in Evolent Health), won’t have the other’s system in their MA products. And Hopkins will start with just MA PPOs, which could be a sharp contrast with Kaiser Permanente’s MA product structure.

What do you think about all these provider-owned MA products in the works in Maryland? Is this a good development for the industry — and for Medicare beneficiaries? Can they all be successful? What will this mean for the other MA plans in the state and for MA penetration? And is Maryland, which bills itself as The Free State, in its burgeoning provider-owned MA a harbinger of the future in MA or just an anomaly as usual?

CVS, Express Scripts Unveil Cuts to 2016 Standard Formularies

Reprinted from DRUG BENEFIT NEWS, biweekly news and proven cost management strategies for health plans, PBMs, pharma companies and employers.

August 7, 2015 Volume 16 Issue 15

CVS Health Corp. and Express Scripts Holding Co. recently posted their 2016 drug lists, which exclude both specialty and traditional medications. Both companies claim the cuts generate billions of dollars in savings, but some industry observers continue to question the true financial impact to plan sponsors.

Express Scripts on July 31 said its 2016 National Preferred Formulary, which serves 25 million people in the U.S., excludes 80 products out of more than 4,000 drugs available on the market. As in prior years, the company explained that each excluded drug has a clinically equivalent, lower-cost option available and stressed that its process includes input from an independent group of physicians who review extensive clinical data prior to any cost considerations made by the PBM.

Express Scripts projects that the National Preferred Formulary will save clients approximately $1.3 billion in 2016, for a total of more than $3 billion since the company first excluded 48 products from its 2014 list. Express Scripts added that the changes will impact less than 0.5% of members using the standard formulary.

CVS, meanwhile, on Aug. 3 unveiled its 2016 standard formulary, which features an additional 26 removals for a total of 124 excluded products. CVS began making formulary exclusions in late 2011, when it eliminated 34 drugs from its 2012 standard formulary.

In an Aug. 4 post to the Drug Channels blog, Pembroke Consulting, Inc. President Adam Fein, Ph.D., pointed out that despite the savings promised by the PBMs, there’s been no independent verification of these savings. “By dropping products to gain negotiating leverage, PBMs get significant marketing advantages with their plan sponsor clients,” he wrote. “Basically, the PBMs can claim to be standing up to pharma on behalf of payers, regardless of the actual dollar or patient impact.”

“I feel that it is important for clients to analyze the costs, savings, and disruption as a result of these formulary changes,” advises Brian Anderson, a consultant with Milliman. “It is important for the clients to validate that these changes line up with their goals for access to care and financial objectives for 2016. The formulary is a key financial driver, and placement of the new high-cost medications and biologics during 2016 will influence trends significantly.”

Download the CVS drug list at View the Express Scripts drug list at

According to a recent analysis of 10 years of data

... on surgical "never events," wrong-site surgery is estimated to occur once per 100,000 procedures, and the incidence of retained surgical items is estimated at once per 10,000 procedures.

Source: "Wrong-Site Surgery, Retained Surgical Items, and Surgical Fires," JAMA Surgery, abstract only, August 2015,  

$54 million

... in bonus payments were awarded by UnitedHealthcare to more than 4,000 providers who were named winners of the PATH Excellence in Patient Service Awards.

"This is as government-friendly a court decision as is possible."

— Denver attorney Jeffrey Fitzgerald, who is with the firm of Polsinelli, told AIS's Report on Medicare Compliance for a story on an August 3 court decision that supported the government's Medicare-Medicaid 60-day overpayment refund rule and use of the False Claims Act when providers violate it.

More than 2 million

... enrollees on federal exchanges were unable to take advantage of cost-sharing reductions (which are available to low-income enrollees in addition to premium tax credits) because they chose a non-qualifying plan, according to a new analysis by Avalere Health LLC.

"Compliance is kind of a tough sell because

... it's a lot of pretty dry material, a lot of rules. We end up looking like police officers. 'You can't do this and you can't do that, otherwise the feds are gonna come and get ya.' These ["Breakfast With Compliance" sessions we do] produce a ton of good results because people now know us. We've hopefully had a few laughs together, enjoyed some time getting to know each other. We become more like human beings and less like this terrifying group of people called 'compliance.'"

— Kim Greene, chief compliance officer at Boston Medical Center, told AIS's Report on Patient Privacy.

Tuesday, August 25, 2015

42% of Providers Say Parents are More Accepting of Vaccines

Medscape recently released a study on vaccine acceptance among parents. Here are some key findings from the report:

·         42% of clinicians find parents more accepting of immunizations since the recent measles outbreak.

·         Half believe the shift resulted from fears about contracting vaccine-preventable diseases such as measles.

·         23% reported that school, daycare, and camp admissions played a role in parents' change of heart.

·         Almost 1 in 10 providers refuse to treat families who will not follow recommended inoculation schedules.

·         One-third of HCPs report no change in parents' willingness to accept vaccines despite recent outbreaks.

·         61% still hear suspicions voiced about an erroneous connection between immunizations and autism.

Source: Medscape, August 17, 2015

According to a recent survey:

  • 72% of Americans think prescription drug prices are unreasonable
  • 83% approve of allowing the federal government to negotiate with drug companies for lower prices on medications for Medicare beneficiaries
  • 76% favor limiting the amount drug companies can charge for high-cost drugs for illnesses like hepatitis or cancer
  • 51% feel that regulation by the federal government would do a better job at keeping prescription drug costs down than marketplace competition
  • 40% feel that marketplace competition would do a better job at keeping prescription drug costs down than government regulation

Source: "Kaiser Health Tracking Poll: August 2015," the Henry J. Kaiser Family Foundation, August 20, 2015,

Monday, August 24, 2015

80% of Doctors Monitor Their Online Reviews

Vitals recently conducted a survey on physician interaction with online reviewers. Here are some key findings from the report:

·         Over 80% of doctors monitor their reviews and ratings online.

·         1 in 3 doctors said they monitor reviews monthly, and 12% check them weekly.

·         13% of doctors said they almost never monitor online feedback from patients.

·         One third of doctors have responded to online patient feedback.

·         25% of U.S. adults consult online doctor-rating sites.

·         200,000 patients leave a review or rating each month on Vitals, the largest collection of reviews.

Source: Vitals, August 11, 2015

According to a recent survey,

54% of Americans report currently taking at least one prescription drug, and 37% of those take four or more different prescription drugs.

Source: "Kaiser Health Tracking Poll: August 2015," the Henry J. Kaiser Family Foundation, August 20, 2015,    

2015 States with an Active Medicaid ACO Program

1.    Colorado

2.    Illinois

3.    Iowa

4.    Maine

5.    Minnesota

6.    New Jersey

7.    Oregon

8.    Utah

9.    Vermont

Source: Center for Health Care Strategies

2015 Public Exchange Special Enrollment Period Enrollment by Type

1.    Loss of Coverage (467,385 - 50%)

2.    Determined Ineligible for Medicaid/CHIP (180,561 - 19%)

3.    Tax Season (143,707 - 15%)

4.    All Other SEPs (152,281 - 16%)

Source: CMS Fast Facts

Friday, August 21, 2015

21 months in prison

...was the sentence for a Jersey City, N.J., pediatrician who allegedly billed Medicaid for 1,000 wound repair procedures that he did not actually perform.

"[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 be in percentage of premiums, participating in underwriting margin as provider-owned health plans or joint ventures."

— Charles Saunders, M.D., CEO of Healthagen, an Aetna Inc. subsidiary, told the audience at the recent Accountable Care Organization Summit in Washington, D.C., prior to news of the proposed Aetna-Humana merger.

Most hospitals will face some sort of Medicare penalty

...for excessive 30-day readmissions, losing a combined $420 million in the fourth year of the federal readmission reduction program, according to a Kaiser Health News analysis.

21 of the 23

...Consumer Operated and Oriented Plans (CO-OPs) established under the Affordable Care Act are losing money, 13 are falling short of enrollment goals, and some may be unable to pay back their shares of the $2.4 billion in aggregate government loans, according to a recent report from the HHS Office of Inspector General.

"Everybody sees the baby boomers coming and they are realizing,

...and they should have probably been realizing five years ago, 'hey, I better get into the [Medicare Advantage] space, or Medicare business.' Now they are all rushing to get there. Companies that didn't get into this business, whether they are strictly just Medicaid or they are in commercial or ACOs, a lot of these companies are willing to jump into the Medicare space."

— Jeff Fox, president and CEO of Gorman Health Group, LLC, told AIS's Health Plan Week.

Thursday, August 20, 2015

Downside Risk Pacts Are Eyed As Health Insurers Consolidate

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.