Featured in Health Business Daily, July 7, 2014, and featured Health Business Daily Story, July 3, 2014

Payers Are Eager for Primary Care MDs to Take on Additional Risk

ACO BUSINESS NEWS covers the latest industry actions to design and create ACOs, for hospitals, physicians, health plans and their advisers.

By Jane Anderson, Editor
July 2014Volume 5Issue 7

Most value-based contracts with commercial insurers still feature shared savings and rewards for higher quality, but payers are eager to evolve those agreements so that they include more risk for primary care providers, and also begin to include specialists.

That’s the word from payer and provider representatives who spoke June 19 at the National Accountable Care Organization Summit in Washington, D.C., sponsored by Global Health Care LLC. The four speakers told attendees that value-based contracting rapidly is becoming the norm in the commercial space.

James Fawcett, senior vice president for provider contracting and relations at Highmark Blue Cross Blue Shield, said the Blues plan’s goal was to have 75% of members in pay-for-value contracts by 2016, and those contracts “must support all members and all programs.”

To achieve this, Highmark has pursued some innovative payment arrangements, Fawcett said. For example, its end-stage renal disease (ESRD) program now includes shared savings contracts with major dialysis providers in Highmark’s region. “ESRD costs an average of $10,000 per member per month,” so shared savings on those patients adds up quickly, he said.

In addition, Highmark has restructured its oncology reimbursement so that it rewards oncologists who follow care protocols, Fawcett said. He said many oncologists in Highmark’s service area were selling their practices to hospitals, but this allows those oncologists to stay independent. “We can document the return on investment,” he said.

Like other insurers, Highmark is pushing hard to drive data to where it’s needed — “at the patient level, the physician level and the practice level,” Fawcett said. “We’re meeting the provider where they are. We don’t let perfection get in the way of the transaction, and we’re trying to move the needle.”

Fawcett said he knew efforts to make delivery system changes were having an effect when a leader at a large primary care practice in Pittsburgh told him the practice wasn’t paying its masters’ level social workers enough — the practice needed those social workers to prevent readmissions, indicating a strong focus on proactive care management.

Majority of Cigna’s ACOs Are Hospital-Centered

Richard Salmon, M.D., national medical director for performance measurement and improvement at Cigna Corp., told meeting attendees that Cigna has 89 Collaborative Care arrangements so far, covering more than 16,000 primary care physicians and more than 910,000 Cigna members (ABN 5/14, p. 1).

About 60% of the groups with which the insurer contracts are hospital-centered — physician-hospital organizations, integrated delivery systems or large medical groups affiliated with a hospital organization, he said.

Cigna doesn’t sell information to its delivery system partners, Salmon said. Instead, “we provide in-kind information,” such as performance reports and real-time hospital admission information. It’s critically important to provide those reports at the individual physician level because that helps to engage individual physicians, he said.

These informatics enhance support for evolving ACOs and expand health information exchange for mature ACOs, he said.

Financial models Cigna is using in its ACO contracts include shared savings from the start, but initially without downside risk. The pacts later progress to shared savings with some shared risk, Salmon said. Next, the contracts expand to include pharmacy and behavioral spending, and then expand to include patient experience of care. The insurer will consider capitation in mature ACOs in certain markets, he said.

“Successful ACOs are the anchors of tiered and limited network products,” Salmon said. “We’re pushing to continue to grow market share.”

To be successful in the new era of accountable care, primary care physicians need to remain generalists and retain the biggest skill sets possible, while still consulting specialists where needed, Salmon said. This will enable them to better manage the care of complex patients in-house, where it’s most cost-effective, he said.

Meanwhile, Cigna sees primary care groups setting up what he called “mutual understanding contracts” with specialist groups, promising those specialists referrals in exchange for a strong working relationship in a value-based environment, Salmon said. “That’s how we see specialists being engaged.”

HCSC Is Prescriptive on Quality

H. Scott Sarran, M.D., divisional senior vice president and chief medical officer, government programs, Health Care Service Corp. (HCSC), said ACOs won’t save money by directing programs at low-cost members. “In the ACO space, a lot of the low-cost members are not attributable,” he pointed out.

Therefore, ACOs need interventions for potentially costly members, and they need incentives to be aligned for those members to utilize those interventions, Sarran said.

“We’re not at all prescriptive in how they achieve medical cost and utilization savings,” Sarran said of HCSC’s provider contracts. “On the quality front, however, we have been very prescriptive — very directive — of how groups should achieve success.”

The upshot? “We’ve been very successful in the quality arena,” Sarran said. “That informs our approach in the ACO space. It’s not enough to create a win-win financial arrangement.” Instead, insurers need to create incentives that support both quality and cost savings, he said. “A system is perfectly designed to get the results it gets.”

HCSC, like most of its competition, is making “fairly significant investments in physician-led entities,” Sarran said. It’s not clear whether that approach will pay off, or whether hospitals will snatch up even more physician practices, he said. Large hospital system-led ACOs likely also will develop their own health plans, although it’s not clear whether those will be successful or not, he said.

“We need to find a kind of middle ground here,” Sarran said. “What we’ve got to find to make the ACO movement successful is a middle ground between a wide open PPO and the traditional unpopular gatekeeper HMO. There are all sorts of ways we can try to mimic HMOs without having it be through a gatekeeper.”

From a provider’s perspective, Thomas Raskauskas, M.D., president and CEO of St. Vincent’s Health Partners, Inc., in Bridgeport, Conn., told conference attendees that his organization, which has 400 providers, one hospital and is negotiating an affiliation with three skilled nursing facilities, “needs to be flexible enough to deal with 10 to 20 models.”

St. Vincent’s No. 1 request from payers? “We need data — real-time data,” Raskauskas said.

“Our primary care network has about $1.1 billion in [annual medical] spend. When I present to our physician network, I tell them that if we can just cut spending by 5%, that’s a lot of money we would be splitting and adding to your bottom line,” Raskauskas said. Still, he added, “we focus on quality, and that results in lower costs.”

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