• ACO Pioneers Enter the Payer Market

    May 23, 2013

    Accountable care organizations are tapping the employer self-insurance market to assist companies with rising costs as the ACA expands coverage to more people.


    Leaders from two of the first accountable care organizations (ACOs) accredited by the National Committee for Quality Assurance (NCQA) shared their experiences during NCQA’s webinar “Lessons from the First Accredited ACOs.” The two ACOs, both of which are large multispecialty group practices, are collaborating with payers and employers to leverage quality and efficiency in health care.


    Implementing Value-Based Payment and Shared Savings 

    "We are working aggressively with payers to develop commercial risk contracts that reward us for outcomes rather than transactions," says Hal Teitelbaum, MD, managing partner and CEO, Crystal Run Healthcare. "Under traditional fee-for-service arrangements, we are actually penalized for efficient care. The transformation from volume to value involves the concept of demand destruction—the better we take care of patients, the fewer services necessary, and the lower the intensity of services required. In contrast, under traditional fee-for-service arrangements, the better we do for patients, the less we are compensated. 

    "Fundamentally, we believe that value-based care—the care provided by accountable care organizations—is in the best interest of our patients, society, and our physicians, who gain the most satisfaction when they do the best they can for our patients. 

    "We are currently in the process of implementing value-based contracts with Empire Blue Cross Blue Shield, Aetna, and Affinity, among others. These agreements typically take the form of shared savings, and utilize performance measures similar to those in the Medicare Shared Savings Program, in which we also participate. We plan to transition to increased levels of risk over the next 12 to 36 months.

    "In addition, we’re looking to partner directly with self-insured employers through agreements involving aggregate stop-loss to create a shared savings environment. In such an arrangement, our practice works with a third-party administrator who adjudicates claims from various providers for services provided to employees. Crystal Run Healthcare serves as the core of a narrow network of select providers. The stop-loss covers the cost of any care provided beyond a predetermined aggregate amount. 

    "By employing the tenets of accountable care, we are able to provide higher-quality care at a lower cost. We will share savings with employers, and those employers can pass that savings on to employees in the form of higher wages or lower employee contributions to health insurance premiums.

    "Finally, we are exploring the possibility of starting our own health plan, which we believe provides the ultimate in accountability. We can share the benefits of improved care, improved health, and lower cost with employers and individuals who contract with us directly.

    Hal Teitelbaum, MD, JD, MBA, is managing partner and CEO, Crystal Run Healthcare, Middletown, N.Y.

    BerthelsenEntering the Payer Market 

    "The accountable care movement is trying to manage healthcare spending so that we receive greater benefit from each dollar spent. At Kelsey-Seybold, we are embracing the mission of lowering costs and increasing efficiency deep into the marketplace," says Spencer C. Berthelsen, chairman and managing director. "We own and operate a Medicare Advantage Plan known as KelseyCare Advantage, which has 23,000 members. We also offer a commercial version of this accountable brand of health care through KelseyCare powered by Cigna, in collaboration with Cigna. 

    As the Affordable Care Act takes hold in 2014, it will offer coverage to previously uninsured members of our communities, which will tend to raise the overall cost of the insurance risk pool. As a result, some employers that are currently fully insured will seek to become self-funded. We think we can offer them an opportunity to seek medical care within Kelsey-Seybold that is designed to raise value by increasing quality and eliminating unnecessary cost.

    Spencer R. Berthelsen, is chairman and managing director, Kelsey-Seybold Clinic, Houston.