Guest Commentary: 7 tips for insurers considering an ACO

Guest post by Martin Graf

Highmark's announcement last month that it will acquire West Penn Allegheny Health System is the latest signal that insurers are working diligently on alternative strategies before being run aground by healthcare reform. One important impetus behind the deal is to enable the Pittsburgh-based insurer to create a holistic care model by managing both the payer and provider sides of the healthcare equation effectively.

Although M&A is one way to establish a viable care model that focuses on patients' overall health, it may not be the right strategic answer for many payers. Below, I've outlined seven key considerations for insurers as they determine the best approach to engage in an integrated care model, such as an Accountable Care Organization (ACO).

1. Reassess Market Needs: Use market insights and relationships with hospitals, providers, and health systems to institute tailored programs, such as wellness and wellbeing, to better address specific populations. Also, team up with providers to develop strategies that serve distinct populations--such as Medicare and Medicaid patients--efficiently and effectively.   

2. Establish and Administer the New Care Models: Create relationships with a range of providers to be well-equipped to establish a process of effective care choreography (e.g., coordinating health and wellness initiatives among hospitals, doctor practices, ancillary care providers, post-acute settings, etc.). Some of the most visible pilots in this area include CIGNA (Georgia), Blue Shield of California, and WellPoint (national scope).

3. Institute Incentives for Holistic Patient Care: Capitalize on your experience as bearers of financial risk, and work with providers to develop and implement new risk management strategies as alternative payment models are introduced (e.g., revisiting capitation, gain sharing, bundled payments, etc.).

4. Integrate Clinical Data: Extend the current information technology (IT) "wiring" beyond basic revenue cycle management/claims payment applications to help facilitate information flows across care settings. A cohesive enterprise IT solution also has the potential to accelerate the access of clinical information while minimizing IT interoperability and accessibility roadblocks.

5. Transition Care Seamlessly: Collaborate with providers to deploy innovative care models to help improve care quality and reduce costs linked to poor care transitions, which often cause increased readmissions or complications post-discharge. Several novel ACO pilots today are marrying the efforts of payers and providers to create new transitional care and coordination models.

6. Measure Performance: Develop and pilot programs that measure care quality based on holistic provider performance. An example of this type of measurement is the Medicare Star Quality Ratings being applied by CMS to Medicare Advantage (MA) plans. Star Quality ratings link clinical measures, customer satisfaction, and service measures to MA plan bonus payments (or effectively to reimbursement). With CMS leading the charge, it is likely that other payers will adopt measures similar to Medicare Star Quality Ratings to quantify quality across all patient populations and reimburse providers accordingly.

7. Educate Consumers: Address consumer concerns about new care delivery models, such as ACOs and Patient-Centered Medical Homes, so they see the benefits and advantages. This includes emphasizing individuals' ability to help manage their own care and addressing misperceptions associated with the coming of narrower networks and more holistic care.

Reengineering Care
Payers are in a unique position to take an active role in shaping a new framework for patient-centric care. Although the operations and mechanics of care are largely in place, insurers need to realign and (in some cases recreate) reimbursement models that promote holistic care and are financially viable. Senior healthcare executives also need to maintain an open mind to collaborating across the continuum of care, and refocus on the primary populations that they serve. This change in mindset is critical if payers and providers are to succeed in this new environment that rewards better care at lower costs.

Editor's note: Martin Graf is a vice president of L.E.K. Consulting in the healthcare services practice.