Can Insurers Really Cooperate With Doctors to Improve the Quality of Healthcare?

Last Updated Mar 16, 2011 1:23 PM EDT

The oldest and most successful accountable care organization (ACO) in the U.S. is Kaiser Permanente, the big group-model HMO based in California. ACOs are suddenly a hot topic in healthcare; the new healthcare reform law allows groups of doctors and hospitals that form ACOs to pocket any Medicare cost savings they reap by making medicine more efficient while keeping patients healthy.

But Kaiser includes one key element that most would-be ACOs lack: an insurance company. Kaiser not only delivers care but also finances it. The question today is whether other insurance companies see the possibility of partnering with provider organizations to form mini-Kaisers across the country.

Judging by some conversations I had at the recent annual meeting of the Health Information Management and Systems Society (HIMSS), I'd say the answer is yes. For example, Steve Tolle, an executive of Ingenix, a UnitedHealth Group (UNH) subsidiary, told me that Ingenix recently bought Axolotl, a leading vendor of health information exchanges (HIEs), partly because United wants to partner with ACOs and help providers form these organizations. At the request of providers, Axolotl will provide Ingenix with clinical data that the latter company can analyze and use to help current and future ACOs do the essential work of care coordination and care management.

Aetna (AET) chief CFO Joseph Zubretsky told investors recently that his company acquired Medicity, another leading HIE vendor, because the firm will help lay the groundwork for accountable care organizations and the new provider reimbursement methods expected under healthcare reform.

Medicity senior VP Robert Connelly told me that Aetna bought his company so that it could combine Medicity's access to the "desktops" of thousands of doctors with the analytic capabilities of ActiveHealth Management, another Aetna subsidiary that contracts with multiple health plans. ActiveHealth takes claims and clinical data, including lab results and prescriptions, and ferrets out the "care gaps" that patients have. Up to now, ActiveHealth has focused on telling patients about the preventive and chronic disease care they need. Now, with the help of Medicity, it can put this information in front of physicians at the point of care.

Meanwhile, a growing number of health plans are doing pilots with groups of providers that have formed or seek to build ACOs. Among these plans are Blue Cross Blue Shield of Massachusetts, Blue Cross Blue Shield of Illinois, Humana, Anthem Blue Cross of California, and Blue Shield of California.
Back in 2009, before "accountable care" became a buzzword, Blue Shield of California, Catholic Healthcare West, and Hill Physicians launched an ACO pilot with 40,000 members of CalPERS, the big California retirement system. That experiment yielded positive results, including the prevention of premium increases, a 22 percent reduction in hospital readmissions, and $20 million in savings.

Now Blue Shield has assembled two new ACOs for the San Francisco Health Service System (HSS), which includes 100,000 city workers, dependents, and retirees. This time, Hill and CHW are partnering with the University of California San Francisco health system for some HSS members, and the Brown & Toland Medical Group is joining with California Pacific Medical Center to care for other people in HSS.

Of course, the role of health plans varies from one market to another. In Illinois, for example, Advocate Healthcare alone landed a big ACO contract with the Illinois Blues. In southern California, Anthem Blue Cross is piloting an ACO with large independent practice associations.

Whatever form this approach takes, some health plans apparently see their future as inextricably connected with ACOs. Already, their business with large, self-insured employers brings them only administrative fees that provide a thin profit margin. If ACOs take full financial risk for care, or share it with employers and the government, commercial plans will be in a dicey position. So they may want to join forces with providers, most of which lack the plans' expertise in data analysis, utilization management, and chronic disease management.

David Classen, a senior partner at consulting firm CSC, said he expects hospital systems and health plans to build ACOs together. Health plans, he said, wonder what their business function will be in a few years, and they have core competencies that providers lack. All of this could lead, he says, to the formation of vertical organizations similar to Kaiser Permanente.

Of course, many bridges must be crossed to get to that point, including the distrust between providers and insurers and a physician culture that still focuses more on individual patients than on population health management. But keep an eye on this particular vision: it could become reality.

Image supplied courtesy of Wikimedia Commons.
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  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.

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