Accountable Care Organizations: Shifting the Paradigm

By: Nathan Ackeret, Burnham Benefits Insurance Services

The U.S. healthcare market has been short on solutions to combat the ever-increasing costs of healthcare and its effect on rapidly rising health insurance premiums. But, challenging as it may be to believe, there are some bright spots in healthcare—one being Accountable Care Organizations (ACO).

The stated goals of the Affordable Care Act (ACA) are to make health insurance more affordable to millions of Americans who lack health insurance coverage, to expand Medicaid to cover millions more Americans, and finally, to support innovative medical care delivery systems that drive down costs. This last goal has resulted in a number of notable innovations, in particular the ACO.

ACOs effectiveness in yielding favorable patient outcomes and cost savings make them a successful solution for the commercial marketplace, specifically  through their leverage of three primary components: patient outcome-based financial incentives, patient quality improvement strategies, and data analytics. Hospitals, medical groups, pharmacies and often insurance carriers partner to improve patient outcomes through shared data, goals, and financial incentives created through the shared savings.

The most successful, predominant ACO in the U.S. is Kaiser Permanente. Kaiser has existed for decades and has established hospitals, medical groups and pharmacies within its own facilities. Kaiser operates by a proprietary electronic data system, making patient data more accessible, accurate, and easy-to-analyze. it also operates as the insurance carrier, selling through the employer group marketplace, state exchanges, and direct to individuals.

Motivated by the opportunity to reduce patient healthcare costs and improve profits, ACOs work within a shared data system that closely measures patient care and quality metrics. As patients move throughout the ACO network, from their primary care physician to a specialist, to an outpatient surgery center, hospital and pharmacy, their data remains accessible to each provider in real time. The result is  improved efficiency and the ability to provide effective information to providers regarding effective approaches to disease management, rehabilitative methods, and comprehensive care strategies.

ACOs are also developing teams to support transition and ongoing care needs, which reduces hospital readmissions and rehabilitation times.

An example of a successful ACO in the Southern California marketplace is the Anthem Blue Cross Vivity ACO. Vivity includes hospitals and medical groups in Ventura, Los Angeles, and Orange counties. Some of the providers within the Vivity network are UCLA Health, Cedars-Sinai, Dignity Health, Huntington Hospital, Citrus Valley Health Partners and MemorialCare Health Systems. Each entity within the provider network is integrated with a focus on improved patient outcomes at a lower cost and sharing pertinent data for improved patient care management.

So, what effect will the ACO’s success have on the employer-based group insurance marketplace?

The insurance carriers are betting on this model to produce healthcare cost savings and, by extension,  group health insurance premium savings—an advantage to employers and employees alike. They say that their ACO provider network benefits plans are delivering premium savings in the range of 8-12 percent when compared to similar plan designs within their traditional provider networks

In an era in which employers’ cost containment options have been limited to reducing benefit plan levels and cost-shifting contributions, deductibles, and coinsurance amounts to their employees, it’s clearly time for a better option. ACOs can yield healthcare outcome advantages to patients and deliver a quality provider network option at a reduced premium amount. If the ACO model can sustain delivering these positive results, there is no doubt the employer group marketplace will take advantage of this option— allowing it to become a primary offering in most employers’ benefit programs.

Nathan Ackeret has nearly 10 years of experience in consulting with companies of all sizes on health benefits and healthcare reform compliance. As the vice president and managing director of Burnham Benefits’ Los Angeles office, Ackeret is a successful sales leader with more than 15 years of experience achieving top sales performances.