HPCI News: Accountable Care Organizations (ACOs) and Iowa employers-purchasers

To: Members and Selected Others

Payment of health care providers in Iowa and across the U.S. is moving from volume-based to value-based. Under this approach doctors, hospitals and other providers are rewarded for outcomes, not procedures. This is being developed in various ways. One is the formation of Accountable Care Organizations (ACOs) which seek to address costs, suboptimal quality and patient frustration that result from the fragmented delivery system.

An ACO is a local provider entity that is responsible for all the care health care and related expenditures for a defined population of patients. The provider entity can take many different forms. Unity Point Health, The Iowa Clinic, Mercy Health Network, University of Iowa and Genesis reportedly have or are developing ACOs. There are others in the works in Iowa as well as in the greater Iowa market area such as those based in Omaha, Sioux Falls, SE MN and SW WI.

Many Iowa employers are interested in exploring these new approaches. The Catalyst for Payment Reform has issued an Action Brief titled “Implementing Accountable Care Organizations” which spells out a series of steps employers-purchasers can take. They are the following:

1) Participate in state-level discussions and possible regulatory action regarding ACO development. Give attention to the following issues of employer-purchaser interest:

  • Protection against possible monopoly pricing by large ACOs without any meaningful market competition
  • Ensuring that provider financial success is contingent, in part, on performance on access and quality measurements to protect against an incentive to undertreat
  • Protection of providers against catastrophic financial loss through risk-adjustment of payment and other means
  • Support testing and/or use of broad network products (if desired by employer in response to a consumer preference for a broad choice of providers)
  • Support for self-insured employer testing of and/or use of ACOs in their networks (if employer is self-insured)
  • Ensure full transparency on clinical performance and financial arrangements to ensure accountability

2) Encourage your TPA or insurer contracting with ACOs to address the aforementioned concerns, and to offer shared-risk arrangements as appropriate to provide further incentives to providers to contain costs and improve quality

3) Support employer coalition and insurer efforts to obtain state support for anti-trust protection and other means to ensure competitive health care markets, since provider consolidation to contract on a global basis may result in monopoly pricing

4) Offer an HMO with a network provider entity(ies) receiving global payment as an employee option, as such a network will have significant capability to influence cost and quality, as evidenced by CalPERS experience in 2010

5) Anticipate a multi-year transition, and encourage state government and insurers to jointly monitor the development, implementation and operation of ACOs to identify opportunities for improvement and unanticipated consequences, and stay involved

For more information please contact the HPCI office by emailing health@hpci.org.

Paul M. Pietzsch, MPH
HPCI - IHBA Office
4430 Ashley Park Drive
West Des Moines, Iowa 50265
(515) 778-6300

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