The idea that accountable care organizations (ACOs) save money and improve quality is rapidly becoming more than just a theory. It’s a powerful, proven method changing how health care is delivered and paid for by some of the nation’s leading employers.
The engine driving value-based care is ACOs incented on improving quality and efficiency. And, so far, it’s translating into tangible savings and rewards for the ACOs committed to this form of care delivery. For example, one large hospital-based ACO in the Southwest received a year-end incentive payment of $24 million this spring from UnitedHealthcare.
“That was their share of the savings from significant improvements in quality performance indicators,” said Ernie Bourassa, Vice President of Network Solutions for UnitedHealthcare National Accounts. “If a medical group or ACO can measurably improve quality and reduce cost, they’re going to benefit financially. It makes a world of difference. We’re encouraging employers to implement high-value networks like ACOs —and beyond that, to incorporate design features that genuinely incent members to use high-value providers.”
The payment to the southwestern ACO accounted for about half of the 7 percent savings achieved by the ACO through a lengthy list of value-based changes from the year before, affecting both cost and quality. These included fewer emergency room admissions, out-of-network procedures and hospital readmissions — plus more annual preventive screenings, earlier coordinated care in areas such as diabetes, cancer and heart failure, and greater use of freestanding outpatient surgical centers.
For their part, employers of members treated by ACOs that perform like the southwestern ACO may also see savings, reflecting the efficiencies and cost reductions the shared payment represents. They’re part of the newest stage of cost and quality management at UnitedHealthcare, moving beyond “consumer directed” plans, gold-silver-bronze benefit mixes and wellness measures that preceded them into the realm of network design to “steer” members toward providers of proven value.
“Last year more than 16 million people had relationships with physicians in more than 1,000 value-based agreements, including ACOs.”
Last year more than 16 million people had relationships with physicians in more than 1,000 value-based agreements, including ACOs, performance-based physician contracts tying fee increases to quality metrics, and bundled payments for managing specific conditions such as cancer or spine and joint disease.
Value-based offerings are growing fast and lead on quality
Care provided pursuant to these value-based agreements now comprises about half of all UnitedHealthcare’s spend, an estimated $66 billion this year, more than triple the amount in 2012.
As a group, ACOs and other providers in value-based compensation arrangements significantly outperformed their counterparts not in value-based compensation arrangements in both employer-sponsored and individual-coverage groups on measures of health care delivery and cost reduction.
“Open access plans remain popular but narrower options are growing as employers demand strategies to contain costs, maintain quality.”
ACOs and providers in value-based programs representing 110,000 physicians and more than 1,100 hospitals contract with UnitedHealthcare across the country on a spectrum of narrow and tiered network designs UnitedHealthcare has developed and refined in recent years as alternatives to open access plans. The latter, such as UnitedHealthcare’s Choice Plus, remain very popular with consumers but narrower options are growing as employer plan sponsors demand new value-oriented strategies that contain costs more effectively, without sacrificing quality.
“Traditionally, carriers built provider networks and negotiated discounted rates,” Bourassa said. “The approach was to contract with as many as possible so everybody had choice. If everybody’s doctor is in, you don’t have to worry about out-of-network issues and people can go where they or their primary care doctor prefer.
“That worked for a while but as data has gotten richer, deeper and more specific, we’ve seen differences emerge in provider performance, along with vast differences in quality and cost.”
Network design options range from UnitedHealthcare Charter® Basic (no specialty coverage without referral, no out-of-network coverage except emergencies) to Choice Plus (broad access to large network of physicians without primary care referral) and numerous combinations in-between. Added to these is wide variation in benefit levels such as coinsurance, copayments, annual limits and deductibles. This list conveys the essential features of the network options, along with ranges of potential savings from using them.
Primary care providers are making a comeback as network guides
Two additional key developments over the past 18 months are employers’ rising interest in (i) restoring primary care doctors as first-stop guides directing patients to high quality, efficient care, and (ii) eliminating or sharply reducing of out-of-network coverage.
The shift toward greater control might surprise those who recall the unpopularity in the past of managed care “gatekeeper” plans that restricted choice and failed to adequately incent quality care. But there are key differences this time around, including the provision in some plans of safety valves offering members choice – i.e., an “out” allowing direct access to a specialist – for higher shared cost.
Another change from the past is today’s unprecedented quantities of cost and quality data – very often delivered in real-time to both patients and physicians. Patients receive guidance – often as accessible as a cell phone app – toward UnitedHealthcare-designated high-value providers with documented high-quality, affordable care. Providers use data to measure their own practice patterns against evidence-based standards and, in real-time, monitor and actively coordinate care to help prevent or minimize costly and debilitating events, such as strokes. For providers sharing savings and in some cases risk with the insurer, having access to such data is crucial to success.
“We provide ACO physicians with data every day now. If their patient had a hospital admission yesterday, they’ll know about it today,” Bourassa said. “The amount of information we can and do provide to physicians is huge and much more than carriers could provide in the past. We would capitate a group but could not provide the information that would enable them to be effective that we are providing today.”
He noted that UnitedHealthcare analytics supports ACOs by identifying and flagging care gaps such as missed A1C tests for diabetes patients or missing mammograms for women over 40. Analysts can also highlight outlier rates of referrals or failure to use less-costly ambulatory care centers for surgical procedures. In addition, ACOs are alerted to members admitted to the hospital from an emergency room, or by another non-ACO physician, to ensure that the member’s primary physician is aware and can step in to direct care. Out-of-network service issues are also elevated to the primary physician.
“These are all examples of opportunities to improve quality and arrange care more efficiently,” he added.
To be sure, designing balanced networks that work but also allow a measure of choice is complex. Eliminating out-of-network benefits might not always be a cost-saver, for example, depending on the payout implications of driving out-of-network care inside, where the member’s coinsurance rate is lower. Usually savings can be realized, but not always, Bourassa noted.
Similarly he also cautioned against making broad-brush claims about the superior quality of network care. UnitedHealthcare with data-backed confidence can identify high-quality and efficient physicians within the network.
Network design, including ACO-based arrangements, has made great inroads over the past 5 years at UnitedHealthcare, but still has enormous untapped potential, both for growth and improved performance. Bourassa says it is up to UnitedHealthcare and other plans to do more to help them succeed.
“Not every ACO is hitting it out of the park,” he said. “We’ve got to get more members to try ACO-affiliated physicians. If any ACO is hitting home runs but only 30 percent of members have relationships with physicians in that ACO, we have unused potential.”
For more information, please contact your UnitedHealthcare representative.
To read Part 1 of the network strategy series, click here.