Com­mer­cial pay­ers of­fer few up­side op­tions

Modern Healthcare - - THE WEEK IN HEALTHCARE - Rachel Lan­den

Com­mer­cial in­sur­ers have en­gaged in few ac­count­able care con­tracts with no down­side risk for providers—an op­tion in Medi­care’s pri­mary ACO pro­gram that’s pre­ferred by most of its par­tic­i­pants. Ac­cord­ing to an anal­y­sis of 85 ACO ar­range­ments by the Pre­mier health­care al­liance, more than a third of them split sav­ings evenly be­tween in­sur­ers and providers with no penal­ties im­posed for fail­ing to meet goals. But of th­ese up­side mod­els, only 21% are of­fered by com­mer­cial pay­ers; more than half are through the Medi­care Shared Sav­ings Pro­gram or Medi­care Ad­van­tage.

Up­side-only op­tions are more at­trac­tive, par­tic­u­larly in the early years of an ACO, be­cause they al­low providers to test care de­liv­ery mod­els with­out the fear of fi­nan­cial losses while also of­fer­ing the op­por­tu­nity to earn enough in shared sav­ings to off­set ACO de­vel­op­ment costs.

Com­mer­cial pay­ers are “ef­fec­tively tak­ing ad­van­tage of the sys­tem” by mak­ing use of the ACO in­fra­struc­ture seeded by Medi­care, said Blair Childs, Pre­mier’s se­nior vice pres­i­dent of pub­lic af­fairs. “ACOs in­vest mil­lions of dollars in per­ma­nent in­fra­struc­ture such as preven­tive care, chronic dis­ease man­age­ment, med­i­cal homes, tech­nol­ogy and provider net­works,” he said. “The Medi­care pro­gram re­al­izes this and has made a sig­nif­i­cant in­vest­ment in shared sav­ings.”

But Dr. Peter Kongstvedt, who op­er­ates a Vir­ginia-based health­care strat­egy firm, said that if com­mer­cial pay­ers “are pig­gy­back­ing off what Medi­care does, it’s not a bad deal for the hos­pi­tal. The more pri­vate pay­ers, the less the hos­pi­tal has to in­vest.” Kongstvedt also said he has a hard time believ­ing that hos­pi­tals—given the size and mar­ket power many of them wield—are ac­cept­ing pay­ment struc­tures that are fi­nan­cially un­sound for them.

Nearly 70% of com­mer­cial ACO pay­ment ar­range­ments to date have used only care-man­age­ment fees or down­side shared-sav­ings mod­els, where providers face a fi­nan­cial loss if they fail to meet uti­liza­tion and qual­ity tar­gets, ac­cord­ing to the Pre­mier study. In ex­change for the down­side risk, how­ever, com­mer­cial pay­ers tend to be more gen­er­ous than Medi­care if providers do meet tar­gets— of­fer­ing shared sav­ings rang­ing from 50% to 80%, com­pared with Medi­care’s max­i­mum of 60%.

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