Service Providers

Accountable Care - Transforming Healthcare Delivery

At no other time in the history of our country has the healthcare delivery system so rapidly transformed as it has since the passage of the Affordable Care Act (ACA).   With healthcare consuming nearly 20% of our country's GDP, traditional fee for service medicine simply was not sustainable.   Accountable Care Organizations ("ACO's") hope to change that with the aim of improving population health, improving the care experience and reducing the per-capita cost. The Centers for Medicare and Medicaid Services (CMS) have very clear rules and definitions as to what might comprise an ACO for the Medicare market, but when it comes to what it means for the private sector, definitions vary. An ACO is a health care delivery system that has partnered with a payer or purchaser of health care to develop arrangements that align financial interests with the delivery of effective and quality care for a specific population.   However, if you have seen one ACO ... you have seen one ACO since success is contingent upon IT integration, physician-led affiliation, care coordination, access, prevention and convenience, and payment reform that aligns stakeholder interests.

Many plan sponsors might first think an ACO of today is simply warmed over "HMO soup", reheated from the 1990's.   What's different is that we have advances in technology, larger systems of care with greater physician/hospital collaboration, bigger federal incentives and a decade of best practices to guide us.   Many systems will be smart to avoid the  mistakes made  during the HMO era when the market greatly underpriced  premiums, withheld care and failed to model risk accurately.   We're only in the first inning of the ACO era that will continue to  lead to pay for performance, bundled payments, episodic risk sharing and more fully capitated transfer of risk for health sytems.

According to Leavitt Partners latest study, there are over 600  ACOs now across the United States:

ACO's Across the Country

There are three considerations that should prompt employers of all sizes to  consider ACO's in their employee benefits portfolio:

1) Available Now  - Traditional health insurers, physician groups and health systems have been hard at work building partnerships that incorporate shared risk arrangements.   Last year, ACOs began rolling their products out to our  benefit consulting teams for us to share with our clients.   We were pleased to learn  the health systems and carriers are "eating at their own restaurant" by  enrolling their employees into their own ACO over the last couple of years.   For the early adopter seeking alternatives that promise greater value   with a narrower network or steerage mechanisms, ACO options are available now throughout the country.   Our firm has examples of clients who have deployed narrow network strategies in partnership with hospital based systems anchored in DFW.   One of the largests now boasts a network of approximately 50 hospitals, 500 patient access points and 6,000 affiliated physicians.

2) Geographic Density -  Since ACOs are about the delivery of healthcare at the local level, employers with great density (concentrations of a large number of employees) will fare better with this strategy.   In California for instance, CALPERS, one of the state's largest plan sponsors, had enough clout to form a direct contract with a upside  premium credit of nearly $16MM  with a physicians group, Blues plan and hospital system.   This alliance was formed to compete against the dominate player in the area, Kaiser of California.   If you are the major employer in an area, you and other employers have more clout than you might think in this new era of ACO alignment.

3) Show Me the Money -  The most fundamental change that ACOs may bring to the market is a substantial increase in the levels of collaboration among payors and providers.   So how will more integrated models prove to the private sector they can truly remove waste, impact steerage, align incentives with greater patient satisfaction?   These integrated systems realize they must offer up savings in the form of guarantees, ,risk-adjusted PMPMs and total cost guarantees for us to consider their offering.   Initial actuarial projections are targeting PMPM savings ranging from 5-10% off of current spending levels, as contracts mature.

But accountability is up to every organization and every body with a body. The ACO cannot foster health alone ... and that's why the early adopters must be prepared to lead with  executive sponsorship, design and contribution alignment to drive steerage, coordination and communications  that lend support to these exciting options. I am a voracious reader of  Benefits Quarterly,  a publication for peers in my industry.   This excerpt, written by Isabelle Wang and Michael Maniccia of Deloitte, provides a good primer for employers to consider on the topic of ACOs and is available on their website or download here:    

Walgreens PBM Shopping for Suitors

As you may have seen in the news, Walgreens is taking a serious look at selling off their PBM.

What does this mean?   Clients with Walgreens as their PBM either directly, for on-site clinics, or for mail-order or specialty through a carrier or smaller PBM (for example, MedTrak), could be impacted.   This does NOT mean that employees will no longer be able to get prescriptions at Walgreens–Walgreens is looking to sell off their PBM business, not their pharmacy business.
Who will buy Walgreens PBM unit?   Biggest contenders are Medco and Express Scripts.   Express Scripts recently bought NextRx and has openly stated they are looking to acquire PBMs.   CVS Caremark is probably too much of a competitor of Walgreens to be a top contender, but they did submit a bid.
When?   Unknown.   Safe to say this is not an issue for 1/1/2011 renewals.
Why?   The industry is consolidating.   Walgreens as a PBM has less than 8% of the market, which is simply not enough to compete with the big three under their model.   In addition, retail pharmacies and PBMs are proving not to be a good business mix.   When CVS and Caremark merged, shares dropped significantly.
Walgreen PBM Sale
Source: Lockton Pharmacy Analytics

Win $10,000 in Aetna's Healthy Food Competition

It is gratifying to see a health insurance company not act like one when it comes to traditional stodgy branding.   Aetna is partnering with Celebrity Chef Bobby Flay and others to conduct a 10 city competition open to the public to take home the title of America's Healthiest Cook and win $10,000 in kitchen appliances. Look out for Texas stops in San Antonio on October 2nd and 3rd, 2010 and Houston on October 9th and 10th.

Original Source:  Celeb chef weighs in on cook-off | Business Insurance.

Aetna Press Release: http://www.aetna.com/news/newsReleases/2010/0831_BobbyFlay.html