An interview with Patricia A. Ruff

A unique regional network is being well received by Wisconsin payers interested in pursuing value-based payment and other innovative reimbursement models.

Recognizing that strong, independent health systems do not necessarily want to merge, five health systems in Eastern Wisconsin have created a regional network that enables partners to respond like a regional accountable care organization (ACO), while retaining autonomy in their individual markets.

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Agnesian Healthcare (Fond du lac), Aspirus (Wausau), Bellin Health (Green Bay), Columbia St. Marys (Milwaukee) and Froedtert Health (Milwaukee) created a limited liability company-Accountable Care Solutions, LLC (ACS)-to serve as the clinically integrated contracting entity for the regional network.

ACS will receive and distribute payments from payers for specific initiatives that network partners elect to participate in (for example, a bundled payment to manage diabetes).

See exhibits:  

ACS Payer Arrangements  

ACS Operational Objectives

While all health system partners will engage in clinical integration and sharing best practices, the participants can also opt to participate in various ACS initiatives that best serve their local communities. Also, each health system will retain their own payer contracts in their respective regions.

Patricia Ruff, vice president of clinical integration & network development, Froedtert Health, provides more details.

What is your specific role in helping develop ACS?

Ruff: I was part of a development team, which included two to three representatives from each interested health system and legal counsel experienced in the development of entities like our network. The team met regularly during the past year to develop the accountable care strategy.

In my role, I prepared a strategy document, worked with others on the team to define the ACO model, and helped with development of legal documents, the clinical integration platform, and other related materials.

Do you refer to this as an ACO, a regional network, or what?

Ruff: We view this as a regional network implementing an accountable care strategy. The network has the ability to respond as an ACO, but also serves as a learning organization to collect/aggregate performance data, share best practices, centralize certain resources/intellectual capital, and collaborate to implement other innovations.

See exhibit:ACS as a Learning Organization  

What has ACS accomplished to date? And what remains to be done?

Ruff: We have a leadership and management structure in place, including a Board of Managers, a Clinical Integration/Physician Leadership Council, and a Finance Council. All five participating health systems have named representatives to the board and councils.

We are still working on refining our clinical integration platform, finalizing our budget, defining our priorities, and meeting with payers. The challenges ahead will be setting priorities, consolidating clinical metrics around our priorities, synchronizing our efforts, and finding the resources to support process change.

How is the network addressing physician-hospital integration?  

Ruff: Each of the participating health systems have various components of physician-hospital integration in place. For example, Froedtert Health has 120 employed community physicians. We also sponsor a clinically integrated IPA.

What types of payment contracting are you seeking with payers and employers (e.g., bundled payments, pay for performance)?  

Ruff: We are developing the infrastructure and capability to engage in various forms of payment and intend to contract with all types of third-party payers.

We have had preliminary discussions with several major payers in the Wisconsin market, and our model has been well received. We expect to implement multiple contracts in 2011.

Are you applying to participate in the Medicare Shared Savings program?  

Ruff: We are exploring the Medicare Shared Savings and other pilot programs. We are waiting for federal guidelines to be finalized before we establish our timeline for further development.

Do all network members have to pay a fee to help cover the company's expenses?  

Ruff: Each member pays an initial capital contribution upon joining ACS. Baseline operating costs will be paid based on the annual budget that is approved by the ACS board. Additional expenses for each network initiative (for example, a collective effort to reduce heart failure readmissions) will be funded by those participating in the initiative and will be covered either by additional fees paid by those members or deducted from the financial earnings of that initiative.

Who will staff and manage ACS?  

Ruff: ACS will be managed via a management services agreement with Quality Health Solutions, LLC (QHS), which is another entity that is jointly owned by the same members who own ACS.

QHS provides the infrastructure for centralized program development of innovative solutions, and then provides a management services platform for its affiliated and contracted entities to draw from. This centralized approach keeps operating costs down.

Do you have any specific advice share related to reaching out to payers about alternative payment arrangements?  

Ruff: The payers we have had discussions with appreciate a focus that recognizes the need to work more collaboratively (payer-provider) in responding to patient needs and solving the healthcare financing and delivery challenges.

We suggest holding discussions early on regarding how health plans will fund shared savings or other incentive payments, and exploring the interested payers' capacity to manage innovative reimbursement, such as bundled payment. Many payers have significant business composed of self-funded employer groups, and sensitivity exists around asking employers to fund shared savings or pay providers incentive dollars months after services have been provided.

What skills do managed care leaders need in the future?  

Ruff: Managed care leaders need experience beyond the traditional fee-for- service negotiations, and should also have a good command of clinical improvement metrics and the economic impact of shared savings initiatives based on those metrics. Knowledge of clinical integration and how this impacts payer negotiations is important if the entity is clinically integrated. Managed care leaders also need to be prepared for future financial risk-based negotiations.

Patricia A. Ruff is vice president of clinical integration & network development, Froedtert Health, Menomonee Falls, Wis.

Discussion Starters

Forum members: Please add your insights, questions, and comments about this article-in the comment section below, or via the Payment and Reimbursement LinkedIn discussion board.

  • What other areas of the country have good potential for regional ACO-like networks like the one being introduced in eastern Wisconsin? What other areas have strong regional health systems that may want to partner versus merge?
  • What reactions from payers have you gotten when you approached them about bundled payment and other innovative payment contracts?
  • What skills do you think managed care leaders need in the future?

Or perhaps you have another discussion starter.


Publication Date: Thursday, March 17, 2011