The Benefits of Direct-to-Employer ACO Arrangements

Large U.S. employers are beginning to ask: Could contracting directly with health systems reduce costs while improving employee health?

As part of a growing trend, more companies are seeking direct-to-employer accountable care organization (ACO) arrangements. The goal is to create a more affordable health benefit option for employees that is outcome-oriented and results in a healthier, more productive workforce. Global employers such as Intel, Micron Technology, and Boeing have pioneered these sorts of arrangements in the past few years.

In Dallas, Baylor Scott & White Quality Alliance (BSWQA) has joined forces with Dallas Area Rapid Transit (DART), HealthSCOPE Benefits, and Willis Towers Watson to create an innovative ACO health plan offering. Starting this past Jan. 1, the offering aims to improve healthcare quality, affordability, and general productivity for about 3,600 DART employees and their dependents.

Like many employers, DART was seeking a more affordable health benefit option for its workforce. Over the last few years, the company watched its employee healthcare costs rise by 7 percent annually. The new plan, among the first of its kind in North Texas, uses BSWQA’s network of more than 5,000 primary and specialty care physicians, 50 hospitals, more than 95 post-acute care facilities, and other healthcare stakeholders. All BSWQA providers agree to be jointly accountable for improving quality, managing the health of patient populations, and reducing healthcare costs.

BSWQA has served Baylor Scott & White Health’s employee and dependent population—more than 67,000 individuals—for five years. Thus, it has proven its ability to effectively manage the health of patient populations and reduce costs.

During that time, the BSWQA has seen:

• 22 percent fewer hospital admissions due to better-coordinated care
• A 27 percent increase in the use of in-network services, which improves quality and affordability
• A 23.7 percent lower medical-cost trend relative to the market over the past five years
• $57 million in savings

How It Works

Traditionally, employers enter an agreement with an insurer to offer employees fee-for-service plans. In contrast, this new model allows organizations like DART to contract directly with an ACO and a third-party administrator (in this case, HealthSCOPE Benefits) to design a value-based care solution that incentivizes positive health outcomes for employees while minimizing costs.

What makes the strategy so powerful is the employer’s direct relationship, which aligns clinical processes closely between providers and patients while reducing red tape, barriers to care, and administrative hurdles. Employees also receive cost-sharing or premium reductions if they take positive steps to improve their health, such as by participating in their own condition management through a chronic care program. These incentives are now standard parts of most ACO benefit packages.

What does this mean for an organization’s employees? The key benefits include:

• Improved patient access to healthcare services
• Strengthened preventive care, disease management, and lifestyle techniques
• Reduced out-of-pocket costs
• Enhanced health outcomes
• Healthier employees

Employers reap benefits as well, including cost management through the integration of nurse care managers and improved case management protocols, tailored plan specifications to meet the company’s unique needs, and promotion of a healthier workforce.

Key Requirements

To pursue a direct-to-employer health plan, providers should have in place a framework that supports value-based care. That framework includes a complete network of providers and hospitals, preventive care and chronic disease management services, data analytics, and engagement of providers throughout the organization. The ACO should have the ability to measure and report on patient outcomes and to show that it can improve care and reduce costs. The model should be integrated across the care continuum. It should be designed to help patients avoid unnecessary trips to the emergency room or hospital and to eliminate unnecessary care.

DART’s ACO health plan allows employees and their dependents to choose top BSWQA physicians and facilities that are committed to delivering integrated, coordinated, high-quality health care. This new plan option, utilizing BSWQA as its preferred care delivery network, promotes a value-based care experience that is centered on physician-driven outreach to keep employees and their dependents healthy. It also reduces scenarios in which beneficiaries spend money on needless or redundant procedures and tests.

The way employers are approaching health care is changing. Our goal is to continue our trajectory of increasing value for our customers by fulfilling their healthcare needs now and into the future. We anticipate that BSWQA will have a positive impact on the health of the DART population, and we look forward to working with more employers in bolstering the health and productivity of their workforce.

Clifford Fullerton, MD, MSc, is president, Baylor Scott & White Quality Alliance, Dallas.

Read more on the Leadership Blog, including a prior post from Clifford Fullerton on a palliative care training program at Baylor Scott & White Health.