Report: Providers under pressure to moderate ACO costs of care
Accountable care organization (ACO) principles have captured the interest of health plans and providers that are under pressure to moderate the costs of care and the premiums they are charging employers and individuals, according to a recently published white paper from Integrated Healthcare Association (IHA).
The report describes how California health plans and physician organizations are leveraging ACO principles developed for cost-effective care management, typically associated with health maintenance organizations (HMOs), with their commercial preferred provider organization (PPO) clients.
"The principal strategy for PPO premium moderation over the past decade has been increasing copayments and deductibles, but health plans recognize that consumers and employers are not sympathetic to more increases in cost sharing," wrote James C. Robinson, Leonard D. Schaeffer professor of health economics, University of California, Berkeley, and the director of the Berkeley Center for Health Technology.
As a result, health plans are developing ACO initiatives that adopt care management principles that are common to approaches that physician groups use to manage care for their HMO enrollees, according to the report. “While most of the ACO initiatives are in the exploratory stage, several health plans…are engaged in programs that could significantly expand the scope of ACO activity in the commercial PPO sector.”
The report examined the challenges and opportunities facing health plans and providers in their efforts to adopt ACO principles and practices for their commercial populations in California. According to the report, aligning patients with an ACO is a challenge because they can seek care from any physician within the insurer's network, including those outside of the ACO. In addition, ACOs plan design features "low" consumer cost sharing when the patient seeks services from providers within the ACO, "intermediate" for services within the PPO network, and relatively "high" for services outside of the PPO contracted network.
“ACOs currently pay physicians for PPO patients on a fee-for-service basis that rewards volume rather than high-value," the report noted. “A more complex three-part payment system has been developed to enable ACOs to manage patients' total cost of care and create shared savings incentives.”
The report also found that delegating authority for care management to a physician group in a PPO is difficult since employers who purchase PPO coverage differ widely in the type of care management programs they elect to purchase. “Effective communication between the ACO and its enrollees is vital for engaging consumer cooperation and enthusiasm in the care process, and educating them about the availability of wellness, disease prevention and other programs. The ability to coordinate care relies on prompt and complete exchange of patient data between ACO providers and health plans,” the Oakland, Calif.-based IHA added.
"ACOs represent the opportunity to forge a middle ground between the traditional HMO product, which controls cost at the expense of consumer choice, and the traditional PPO product, which preserves choice at the expense of cost control," concluded Robinson. "It is now time to overcome the challenges and fulfill the opportunities presented by the principles of ACOs."
Read the report here.
The report describes how California health plans and physician organizations are leveraging ACO principles developed for cost-effective care management, typically associated with health maintenance organizations (HMOs), with their commercial preferred provider organization (PPO) clients.
"The principal strategy for PPO premium moderation over the past decade has been increasing copayments and deductibles, but health plans recognize that consumers and employers are not sympathetic to more increases in cost sharing," wrote James C. Robinson, Leonard D. Schaeffer professor of health economics, University of California, Berkeley, and the director of the Berkeley Center for Health Technology.
As a result, health plans are developing ACO initiatives that adopt care management principles that are common to approaches that physician groups use to manage care for their HMO enrollees, according to the report. “While most of the ACO initiatives are in the exploratory stage, several health plans…are engaged in programs that could significantly expand the scope of ACO activity in the commercial PPO sector.”
The report examined the challenges and opportunities facing health plans and providers in their efforts to adopt ACO principles and practices for their commercial populations in California. According to the report, aligning patients with an ACO is a challenge because they can seek care from any physician within the insurer's network, including those outside of the ACO. In addition, ACOs plan design features "low" consumer cost sharing when the patient seeks services from providers within the ACO, "intermediate" for services within the PPO network, and relatively "high" for services outside of the PPO contracted network.
“ACOs currently pay physicians for PPO patients on a fee-for-service basis that rewards volume rather than high-value," the report noted. “A more complex three-part payment system has been developed to enable ACOs to manage patients' total cost of care and create shared savings incentives.”
The report also found that delegating authority for care management to a physician group in a PPO is difficult since employers who purchase PPO coverage differ widely in the type of care management programs they elect to purchase. “Effective communication between the ACO and its enrollees is vital for engaging consumer cooperation and enthusiasm in the care process, and educating them about the availability of wellness, disease prevention and other programs. The ability to coordinate care relies on prompt and complete exchange of patient data between ACO providers and health plans,” the Oakland, Calif.-based IHA added.
"ACOs represent the opportunity to forge a middle ground between the traditional HMO product, which controls cost at the expense of consumer choice, and the traditional PPO product, which preserves choice at the expense of cost control," concluded Robinson. "It is now time to overcome the challenges and fulfill the opportunities presented by the principles of ACOs."
Read the report here.