With a little flexibility, payors and physicians can profit from the ACO model now, without waiting for CMS’s final rule, advises Greg Mertz, senior project director with the Healthcare Strategy Group.
Mertz, who will analyze CMS’s anticipated guidelines for accountable care organizations during an April 21, 2011 webinar, shared some advice in an interview this week with Melanie Matthews, HIN executive VP and chief operating officer:
Melanie Matthews: What should healthcare organizations be doing now in the absence of any clear direction from CMS on ACOs?
Greg Mertz: Everybody’s focused on and waiting for HHS, which obviously impacts the Medicare ACO model, but no other model. It’s entirely likely that you’re going to have the commercial side of the ACO initiative and you’re going to have the public side, and I don’t think they’re going to be the same thing. So to have people just focusing on, “What do I need to do to either wait for, or understand, or comply with the federal side of this model…” I think if they see ACOs as an opportunity, they’re going to miss a lot more flexibility on the commercial side.
Yes, the regulations are important and will give guidance to a lot of people. There are a lot of people who are like deer in the headlights now, not doing anything but waiting for the message from Washington. But they’re going to have a whole lot more creativity available to them on the commercial side if they’ve got a good partnership with the payor.
Melanie Matthews: What do you see happening in the marketplace on that front now?
Greg Mertz: The first one is Humana in Kentucky, which is partnering with Norton Healthcare to develop an ACO. This ACO was developed as part of the ACO Pilot Project Project of The Engelberg Center for Health Care Reform at the Brookings Institution and The Dartmouth Institute for Health Policy and Clinical Practice.
Health systems with some initiative can get a better model. One of the concerns I’ve got with the government’s accountable care model is this whole concept of freedom of choice. People can slip in and out of the accountable care network; if you’re trying to control costs when people aren’t constrained to like-minded providers, the outcome is kind of up in the air. It’s like being an HMO, but not being in the HMO.
On the commercial side, I don’t think that the payors in the world are going to have the same political need to give their members total flexibility as to what provider they go to. These payors are going to say, “Okay, you sign up. You’re in this network. And you have to stay in the network if you want to be covered by your health benefit.” That’s going to give the provider a whole lot more control over the care that’s delivered, the quality of the care that’s delivered and the cost of the care that’s delivered. That’s going to be more successful than perhaps the public program is going to be.
Melanie Matthews: Humana has launched some initiatives, as have Cigna and UnitedHealthcare. What recommendations would you give to other health plans?
Greg Mertz: They’ve really got to expand the number of demonstration projects, and with the ACO or the network sponsors. Most of the originals—the large physician organizations and the California IPA types —have been partnering with health plans for years but really haven’t dramatically lowered the cost of care. For example, Blue Cross Blue Shield individual policy premiums went up 50 percent this year. So in a matured managed care market, you still have dramatic annual deltas in the cost of care. It isn’t working all that well. Hospitals really aren’t in those systems. The commercial payors are going to have to say, “Okay, we need to look at multiple models in multiple markets, not just health systems sponsors.”
The interesting thing is that the whole ACO concept is physician-driven. They’re the foundation of the model that’s going to make this thing work or not work. Physicians really don’t have a lot of experience being in control of initiatives like that. So the payor is dealing with the more sophisticated negotiator, which is the organized health system. Nobody is sitting down with the folks that are actually going to make this thing successful — the doctors — in those kinds of settings to say, “How can we empower you? How can we help you create the kind of physician network?” Because if the physician network works, it can work with any hospital system. It doesn’t make any difference, because the doctor is driving the bus. The health system can’t be successful unless it has good forward-thinking innovative physician partners. The commercial organizations are talking to the wrong end of the spectrum. They need to be much more focused on getting like-minded physicians together in developing those networks.
Melanie Matthews: That’s an initial step. Are there any other steps that these physicians have to take?
Greg Mertz: One of the big questions that a lot of people have is what kind of infrastructure is going to be necessary, what’s it going to take to run one of these ACOs? Yes, you’re going to need fairly sophisticated date systems. Yes, you’re going to need the ability to collect financial information and make payments to physicians and hospitals and other ancillary providers. So maybe the next step for physicians is to attain the ability or the technical assistance to develop that infrastructure, whether they do an ACO management product, where the UnitedHealthcares of the world can go to any market and say, “You put together the provider network. We’ve already got the infrastructure, and we can layer this over whatever you’ve got in your network. Rather than reinvent the wheel, here’s a model that works. We’ve got the data system. You go deliver the care.”
I think that would make them a welcome partner at this point. Physicians are hearing about horrendous cost requirements. Data systems in the seven- and eight-figure range to put adequate clinical data systems in place, with no understanding of how that’s going to integrate with financial data collection systems. If the commercial payors are seriously wanting to get into this business, they’ve got to help make that happen by addressing some of the business concerns as well as just the provider, clinical delivery concerns.
