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Illinois ACO sees improvement in utilization, costs


By Andrew L. Wang, Crain's Chicago Business
Posted: January 22, 2014 - 1:15 pm ET
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Illinois' largest health network and largest health insurer have shown marked reductions or slower growth in the use of services as part of their 3-year-old accountable-care organization, an encouraging sign as providers and payers try to reduce the cost of care.

Advocate Health Care and Blue Cross & Blue Shield of Illinois started their ACO, called AdvocateCare, three years ago aiming to better align financial incentives between the two mammoth organizations. The utilization trends, which Blue Cross provided to Crain's, provide a glimpse into the progress of one of the country's first and largest commercial ACOs.

Similar to the Medicare accountable care organizations established by President Barack Obama's health reform law, the Advocate-Blues venture pays doctors and hospitals based on how well they meet quality, patient satisfaction and cost metrics for a defined population of about 380,000 members, rather than the traditional fee-for-service model. The ACO does not include all Advocate patients covered by Blue Cross.

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According to data from Blue Cross, Downers Grove, Ill.-based Advocate and its network of 4,000 physicians reduced the admission rate for about 200,000 members in the preferred-provider organization portion of the ACO by about 1.4% from 2011 to 2012. The rate rose at other hospitals in Blue Cross' broad PPO network by 2.2 percent, the insurer said.

The Advocate-Blue Cross ACO also held growth in average length of hospital stay for its PPO members to 1.7% over the same period, compared with 2.7% for the rest of the Blue Cross network, and the ACO limited the increase in inpatient days to 0.3 percent, compared with 4.7% for the rest of the hospitals in Blue Cross' PPO network, the insurer's data show.

Combined with favorable outpatient metrics, the Advocate ACO's costs were trending 2.5% below the other hospitals in the Blue Cross PPO network, said Steve Hamman, Chicago-based Blue Cross' senior vice president of network management.

“It's very positive,” he said. “We're very pleased with it.”

Time will tell

Though any reduction in utilization is encouraging, more years of data will be needed to know the payment model is working, one expert said.

“You want to know that 2012 wasn't just a fluke. Sometimes for no foreseeable reason (utilization) will go up or down,” said Nancy Scola Lombaer, a partner at Chicago-based Laurus Strategies, a benefits consulting firm.

Accountable care organizations are meant to change the incentives governing patient care, encouraging better coordination and management of care to drive down doctor and hospital visits. If providers can meet or exceed benchmarks on outcomes and cost, they can share in the savings. They are penalized if costs rise or quality declines.

Since the Affordable Care Act was signed in 2010, the federal government has approved more than 360 Medicare ACOs in its shared-savings plan, including several in the Chicago area.

The federal CMS separately also established 32 Pioneer ACOs that started operating at the beginning of 2012. The agency said in July that costs for 669,000 Medicare patients in the program rose 0.3% in 2012, compared with 0.8% for similar beneficiaries over the same period, though nine of the organizations dropped out in the first year.

In addition to the favorable results in inpatient services, AdvocateCare saw increases in rates for emergency department cases, outpatient surgery and advanced imaging that were smaller than the rest of the hospitals in Blue Cross' PPO network, according to the insurer.

In addition to the favorable results in inpatient services, AdvocateCare saw rates for emergency department cases, outpatient surgery and advanced imaging lower than the rest of the network, according to Blue Cross.

The agreement between Advocate and Blue Cross originally was set to run until the end of 2013, but the parties extended it for an additional year in 2012 because they were encouraged by early results, Hamman said.

Dr. Lee Sacks, Advocate's chief medical officer and CEO of Advocate Physician Partners, declined to comment on specifics of the contract.

“Overall, Advocate's market share has grown in spite of the declines in inpatient utilization,” he said in a statement. “Outcomes, service and efficiency have also improved over the period.”

Advocate also set a goal of reducing overall cost of care to the market median by 2014. “Early 2013 data appears to indicate this has been accomplished,” Sacks said.

Advocate-Blue Cross ACO sees improvement in utilization, costs originally appeared on the Crain's Chicago Business website.


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