Many private-payer ACOs fail to yield lower costs, better quality
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October 15, 2015 01:00 AM

Many private-payer ACOs fail to yield lower costs, better quality

Bob Herman
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    CHICAGO—Medicare's investment in accountable care organizations has inspired hospitals and doctors to create their own versions of ACOs with private insurers. But as with Medicare, not all private ACOs are achieving lower costs and higher quality.

    Providers and insurers need to do a better job of reaching patients and employers, according to physician executives at four large health insurance companies. They gave their take on the private ACO movement at an event held by America's Health Insurance Plans, the industry's trade group.

    Their experiences reflect that ACOs are still a new structure, and building a new payment and care model as complex as an ACO is not easy to roll out.

    “Our alternative payment models are succeeding at a much lower rate than they should be,” said Dr. Stephen Ondra, chief medical officer at Health Care Service Corp., the Blue Cross and Blue Shield insurer for five states. “In the ACO, the consumer engagement is very, very low.”

    ACOs are groups of hospitals, doctors, post-acute-care facilities and other providers that team up and care for a specific patient population. The CMS spearheaded multiple versions of ACOs through the Affordable Care Act with the intent of reducing costs and improving clinical quality. Providers are able to share in some of the savings if they hit certain quality metrics, a distinction that experts say makes ACOs different from a traditional managed-care HMO.

    Private payers have followed Medicare and flocked to ACOs. Consulting firm Leavitt Partners estimates there are 744 public and private ACOs across the country as of the first quarter of this year, up from 64 during the same period of 2011. There are 132 insurers—ranging from Medicare and state Medicaid agencies to national carriers and regional insurers—that have at least one ACO contract, up from a previous total of 44.

    The uptick among private insurers has been noticeable. Companies send out numerous press releases touting a new ACO affiliated with a health system or medical group. But little is known about how those ACOs perform after the press releases have faded from memory.

    Dr. Alan Muney, chief medical officer at Cigna Corp., said his company has more than 130 large-group ACOs. Only 58% have both lowered costs and improved quality. Part of the problem, he said, is that so many doctors are still paid on a volume basis. Successful ACOs have tied payment to measures of quality, safety and patient satisfaction—and hospitals and doctors were on board with that.

    “When we drill down into what's driving that, it appears unless the groups have aligned their physician compensation system to the incentives, you're not going to get the results,” Muney said.

    Most of the time, patients are not even aware they are part of an ACO, Ondra said. HCSC runs Blue Cross and Blue Shield of Illinois, which has made numerous ACO pacts, including one with Advocate Health Care, a sprawling system based in Downers Grove, Ill., and one of the largest commercial ACOs in the country. But the insurer's HMO plans have done just as well if not better with cost control and quality improvement, because consumers are much more engaged, and because the HMO's benefit design is clear, Ondra said.

    Lack of consumer awareness also plagues Cambia Health Solutions, an insurer and health-services company headquartered in Portland, Ore. Cambia started building ACO agreements in 2013, and now has close to 40 unique accountable-care relationships. Some have performed better than others, said Dr. Richard Popiel, Cambia's chief medical officer.

    “What's missing is the consumer and the experience they have,” he said. “Very few will have a clue they are in those kinds of arrangements. That creates a tremendous gap.”

    While insurers have actively signed on to the ACO movement despite the speed bumps, there's less enthusiasm among large, self-funded employers that take on medical-claims risk for their workers, said Dr. Andrew Baskin, vice president and national medical director at Aetna.

    A report from the Milbank Memorial Fund and the Pacific Business Group on Health, an employer group, acknowledged that “it can be quite difficult to recruit the self-insured population” into structures like ACOs because those companies are unsure how ACOs will play out. And it's their money that's at risk.

    “Value-based payments are not embraced as much in the self-insured world,” Baskin said. “They embrace this in theory, but they don't necessarily embrace it when they write the check.”

    The physician executives said although some ACOs have flopped thus far, they still like the strategy overall. Each insurer has more ACO deals in the pipeline, and they're trying to improve the model for patients. “It's a learning process,” Popiel said.

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