On a wooded campus in Falls Church, Va., Inova Health System has executives in its integrated provider network and its insurance joint venture with Aetna working alongside each other on one floor of a building. It's part of the system's $27 million investment in establishing an insurance arm and an accountable care program.
The physical proximity between leaders of Inova's Signature Partners Provider Network and its insurance joint venture Innovation Health underscores the increasing overlap in operations between hospitals, doctors and insurers as accountable care takes hold across the healthcare market.
“Traditionally, hospitals, payers and physicians have been adversaries,” said Dr. Matthew Poffenroth, chief medical officer of Signature Partners. “This is the exact opposite of that. Now, we're all equally at risk for the quality of care and for the dollar. We have complete alignment of incentives.”
Perhaps not complete alignment, but definitely closer than before. The Inova ACO is one of hundreds of private-sector ACOs taking shape across the country as insurers and health systems test new financial incentive models to reduce costs and improve care. ACOs in the private sector have grown more rapidly and show more diversity than in Medicare, though not all provider systems have made investments and embraced financial risk contracting to the same degree as Inova. For some, these deals will prepare providers and payers for fully capitated arrangements in which providers are paid a global fee per member for managing an enrolled population's healthcare.
Roughly 14 million Americans are covered under commercial accountable care contracts, compared with 7.8 million in Medicare ACOs and 1.7 million in Medicaid ACOs, according to Leavitt Partners, a healthcare consulting firm that tracks ACO developments. More than 100 private insurers and employers have entered ACO contracts. Growth of private-sector ACOs has varied significantly by region and market. That commercial ACO growth comes as Medicare nears the end of its first round of accountable care contracts and the CMS grapples with regulatory constraints and seeks to keep hospitals and physician groups participating. Private-sector ACO participants have greater leeway to negotiate key details such as incentive structures, benefit designs, quality targets and which patients are attributed to the ACO. Private-market efforts can customize ACO agreements to each provider, with the ability to work through operational issues.
“It's not the monopsony Medicare that's (dictating) the rules,” said David Muhlestein, Leavitt's senior director of research and development. “It's more a negotiation between organizations with equal bargaining power.” He said the structure and details of private-sector ACOs vary so much that it's hard to even generalize about what a private-sector ACO is.