One publicly traded insurance company has emerged as a major player in Medicare's accountable care expansion.
Universal American, a Medicare Advantage and supplemental insurance provider, jointly owns nine of the newly announced Medicare ACOs through its subsidiary Collaborative Health Systems. The Accountable Care Coalition of Mount Kisco is among them.
Jim Korry, senior vice president of Collaborative Health Systems, said the company is expected to invest more than $50 million in its accountable care network, which could include as many as eight more Medicare ACOs starting in July, when the CMS approves the second wave of program participants. “This is going to continue to be a line of business for Universal American that we continue to grow,” he said.
Collaborative Health Systems, based in Houston, does not employ doctors, but does hire nurses and social workers to coordinate patient care and will provide clinical support for medical groups, he said. The company will also provide information technology infrastructure and data analytics for the accountable care organizations.
Korry said the company's care coordination among its Medicare managed-care programs made the company well-suited to adopt accountable care. “It was not a far leap for us,” he said.
Universal American reported income from continuing operations of $259,000 on revenue of $2.3 billion for 2011, a significant drop from the prior year after the $1.4 billion sale of its Medicare Part D business to CVS Caremark.
Korry said its accountable-care business markets the company's entry into the Medicare fee-for-service market and will position the company to enter into Medicaid and commercial accountable care organizations.
The company expects that it will recoup its upfront investment in the long term from its share of bonus payments its ACOs earn, Korry said. The company, which owns a 51% stake in ACOs it develops, will receive a share of savings-based bonuses that is tied to its ownership stake and other factors, he said.
Accountable care organizations in Collaborative Health Systems' joint ventures all selected payment without the risk of penalties, he said. “It's still new,” he said.
The new Medicare ACOs that include hospitals say the partnership will allow for closer coordination to curb costs.
Arizona Connected Care includes the Tucson Medical Center, three federally qualified health centers plus 150 doctors. John Friend, executive director of the Arizona Connected Care board, said the hospital always intended to be a minority partner in the effort, which operates in Tucson and southern Arizona.
“The hospital is not in a superior role,” he said, despite its early efforts to establish an ACO. The Tucson Medical Center was selected in 2009 by the Brookings Institution and the Dartmouth Institute for Health Policy and Clinical Practice to pilot private-market accountable care organizations.
Talk among the organization's members has largely focused on clinical integration of its independent providers, he said, which are led by a doctor-dominated governing board, as required by the regulations.
Doctors who participated were those able to absorb upfront investments for a while, or permanently. “Cash flow is pretty problematic,” Friend said. He described members' investment as “material” but said he could not provide a number. Doctors know there is no guarantee of payment and no payment in advance. And only strong performance will reap bonuses. “This is going to be very challenging.”
An organization with hospitals and doctors has its advantages and drawbacks, Friend said.
“If a material amount of the costs we're trying to bring under control exist in the hospital, then I think it's advantageous to have a hospital,” he said. But efforts that included everyone come with challenges. “In our market, it's as difficult as any for physicians and hospitals to see eye to eye,” he said.
For New Pueblo Medicine, a seven-doctor practice in the Tucson ACO, bonus pay-for-performance measures from private insurers has helped offset investment costs for nurses to help educate diabetics and manage patient care, said Dr. Jeffrey Selwyn, chairman of the Arizona Connected Care board and one of New Pueblo's physicians.
He described the hospital's role as “integral” and said the accountable-care effort allows formerly isolated independent providers to learn from one another. “We haven't been able to communicate with each other for lack of time and lack of infrastructure,” he said.
But plans call for more providers, not fewer.
In Tucson, doctor and hospital organizers of the Medicare accountable-care effort are looking for ways to further diversify to include other services, such as skilled nursing, patients will need. “We may be unique and we may be wrong, but we like the broad engagement model” Friend said.
-with Rich Daly