Healthcare Business News

Texas systems latest to launch ACOs

By Melanie Evans
Posted: January 30, 2013 - 1:00 pm ET

Two large Texas health systems with Medicare accountable care contracts are among the latest to enter into commercial ACOs in deals that suggest a growing willingness to adopt the largely untested payment model amid increasing pressure on providers and payers to curb health spending.

Memorial Hermann Healthcare System, which is based in Houston and operates eight Texas hospitals, and the MHMD Memorial Hermann Physician Network, announced plans to launch an ACO on April 1 with Aetna, one of the nation's largest insurers. Last July, Memorial Hermann was among nearly 90 named Medicare ACOs under a provision of the Patient Protection and Affordable Care Act.

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Meanwhile, Texas Health Resources, a 13-hospital system based in Arlington, Texas, said it has launched an ACO with Aetna for enrollees in the area of Dallas and Fort Worth. The deal follows Texas Health Resources' announcement earlier this month that it entered into talks with Blue Cross and Blue Shield of Texas.

Texas Health Resources is among 32 organizations operating as a Medicare ACO under the Center for Medicare and Medicaid Innovation Center's Pioneer model, which was launched roughly one year ago.

Under the Aetna contract, Memorial Hermann will be eligible for bonus payments tied to measures of quality and cost control, but will not immediately be at risk for losses based on performance, said Chris Lloyd, CEO of Memorial Hermann. The health system's experience establishing the operational details of its Medicare ACO aided in efforts to launch a commercial ACO, he said.

Michael Bailit, president of healthcare consultants Bailit Health Purchasing and co-author of a 2012 Health Affairs paper on early ACOs, said the recession and the Affordable Care Act, which signaled Medicare's move toward new payment models, have made providers more willing to adopt shared savings contracts.

Dr. Michael Stoltz, president of Texas Health Physicians Group, said THR's multiple ACO deals will give the health system exposure to multiple patient groups, which may have different needs when it comes to care management. Medicare's older population will have more patients who grapple with chronic disease than a commercially insured group of working adults ages 20 to 40, he said.

The Texas Health Resources' ACO with Aetna will initially cover 5,000 individuals and is expected to expand to 15,000 to 30,000 enrollees, he said. The rate of expansion will depend on the speed with which Aetna identifies patients for the ACO and distributes patient data to providers. Providers will not be at risk for financial losses under the deal, but are eligible for bonuses based on quality and cost-control measures.

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