Hospital Impact—7 strategies for successful payer-provider ACO partnerships

handshake / shaking hands
Rosemarie Day

Accountable care organizations continue to make inroads in the commercial, Medicare and Medicaid markets. By the start of 2017, 923 ACOs were operating nationwide, covering a total of 32 million lives and representing more than 10% of the population, according to Leavitt Partners and the Accountable Care Learning Collaborative.

However, turnover of ACOs during this period was not insignificant. Per the Leavitt Partners/ACLC analysis, while 138 ACOs launched during this period, 46 organizations dropped their ACO contracts.

Launching an ACO is resource-intensive, and there is no guarantee of success. Payers and providers interested in pursuing ACO partnerships should consider the following strategies to help put them on the right track:


2019 Drug Pricing and Reimbursement Stakeholder Summit

Given federal and state pricing requirements arising, press releases from industry leading pharma companies, and the new Drug Transparency Act, it is important to stay ahead of news headlines and anticipated requirements in order to hit company profit targets, maintain value to patients and promote strong, multi-beneficial relationships with manufacturers, providers, payers, and all other stakeholders within the pricing landscape. This conference will provide a platform to encourage a dialogue among such stakeholders in the pricing and reimbursement space so that they can receive a current state of the union regarding regulatory changes while providing actionable insights in anticipation of the future.

Establish common goals

In a fee-for-service environment, payers and providers typically come to the table with very different goals. Payers are generally most interested in managing expenditures, while providers typically seek to maximize revenues. Under an ACO, payers and providers must work together to define common goals, such as improving the patient experience (quality and satisfaction) and achieving population health outcomes at lower cost. They must also hold each other accountable for contributing to meeting these goals.

Align incentives

In addition to establishing common goals, payers and providers must align incentives around these goals. So, if an ACO’s goals are to improve quality, patient satisfaction and population health outcomes at lower cost, providers should be measured on their performance in each of these areas and their reimbursement should be reflective of this performance. As an ACO’s goals or the strategies that support them evolve over time, performance measures must change accordingly. When incentives are aligned, payers and providers have the best opportunity to achieve their common goals.

RELATED: 3 traits of the most successful ACOs—A focus on internal culture, population health and continuous improvement 

In transitioning from fee-for-service to value-based reimbursement, payers must also be willing to help providers succeed financially. This may result in different financial arrangements depending on providers’ readiness to manage risk and requires a greater level of collaboration than in the traditional fee-for-service setting.

Share member data

For providers to deliver value-based care and effectively manage risk, they must understand the health status of their patient population. Payers must be willing to share clinical and claims data, which can enhance a provider’s perspective on a patient’s historical health status, including treatments and associated costs.

By sharing data, payers and providers are better able to identify and develop targeted interventions where they can have the greatest impact. For example, sharing pharmacy claims data could provide useful insight into a patient’s compliance with an established medication regimen intended to help manage a chronic condition. Data sharing also enables providers to better understand how they are performing and what changes may be needed to help them—and the the ACO—succeed.

Focus jointly on patient engagement and population health

Technology is key to an ACO’s success in engaging and managing the health of its members, but many providers have struggled to implement the data analytics and population health management IT infrastructure needed to effectively support their efforts. By helping participating providers access the necessary data, payers have an opportunity to support providers’ ability to identify and positively impact the health of high-risk patients. Payers and providers can also increase patient engagement through an integrated, personalized online user experience.

RELATED: Medicare Shared Savings Program ACOs saved $652M last year

Payers and providers should collaborate on the most effective ways to engage and manage the health of their patients, including the development of an action plan with goals, objectives, action steps, success measures and a mutually agreed-upon timeline.

Combine strengths to improve outcomes

Payers and providers should work together to determine which programs will best help them achieve their mutual goals and which party is best equipped to perform each function.

For example, it may make sense to use the payer’s data analytics capabilities to identify high-risk patients and then leverage the provider’s care management programs to engage patients and ensure that they receive the care they need at the right time and in the appropriate setting.

Build mutual trust

An ACO’s success is highly dependent on payers and providers establishing and maintaining a high level of trust. Only through a true two-way relationship will payers and providers be willing to develop common goals with mutual accountability, leverage each other’s capabilities, align incentives and share data.

Payers’ ability to openly discuss challenges, adapt to change and evolve their working relationship with providers is critical to the success of ACO arrangements.

Take a long-term view

Finally, it is important to note that the transformation required to succeed in accountable care is a long-term commitment. The longer an ACO is in operation, the greater the savings it generates, according to the Centers for Medicare & Medicaid Services. Quality of care also improves over time. Specifically, ACOs participating since the inception of the Medicare Shared Savings Program performed much better against cost and quality benchmarks than newer participants in 2016, with each year showing improvement.

Successful ACOs can positively impact healthcare outcomes, improve the member experience and ultimately reduce costs. If that’s the case, the investment and patience required to succeed will be well worth it.

The author gratefully acknowledges the contributions to this article from Ross Weiler, principal at Day Health Strategies.

Rosemarie Day is the president of Day Health Strategies, a consulting firm that advises healthcare organizations on transformation initiatives, including launching and sustaining ACOs.

Suggested Articles

We need our federal programs and policies to reflect the goal of improving the health of both women and men.

Two lawsuits were filed suing the Trump administration to overturn a new rule that would allow healthcare workers to deny care over religious or conscience…

Policy changes are affecting how investors view the skilled home health market and paving the way for potential strategic acquisitions.