A new report by California's Integrated Health Association and the California Association of Physician Groups suggests that accountable care arrangements with private payors can serve as a "middle ground" between PPO and HMO products.
James C. Robinson, the report's author and Leonard D. Schaeffer Professor of Health Economics at the University of California, Berkeley, and the director of the Berkeley Center for Health Technology, said of the findings, "ACOs represent the opportunity to forge a middle ground between the traditional HMO product, which controls cost at the expense of consumer choice, and the traditional PPO product, which preserves choice at the expense of cost control."
The report examines private payor ACO arrangements in California and discusses challenges and opportunities facing health plans and providers in their efforts to adopt ACO principles and practices for commercially insured populations.
Key issues identified in the report include:
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James C. Robinson, the report's author and Leonard D. Schaeffer Professor of Health Economics at the University of California, Berkeley, and the director of the Berkeley Center for Health Technology, said of the findings, "ACOs represent the opportunity to forge a middle ground between the traditional HMO product, which controls cost at the expense of consumer choice, and the traditional PPO product, which preserves choice at the expense of cost control."
The report examines private payor ACO arrangements in California and discusses challenges and opportunities facing health plans and providers in their efforts to adopt ACO principles and practices for commercially insured populations.
Key issues identified in the report include:
- Linking patients to physician organizations. Aligning patients with an ACO is a challenge because they can seek care from any physician within the insurer's network, including those outside of the ACO.
- New product designs. ACO plan design features "low" consumer cost sharing when the patient seeks services from providers within the ACO, "intermediate" for services within the PPO network, and relatively "high" for services outside of the PPO contracted network.
- Payment methods. ACOs currently pay physicians for PPO patients on a fee-for-service basis that rewards volume rather than high-value. A more complex three-part payment system has been developed to enable ACOs to manage patients' total cost of care and create shared savings incentives.
- Shared responsibility for care management. Delegating authority for care management to a physician group in a PPO is difficult since employers who purchase PPO coverage differ widely in the type of care management programs they elect to purchase.
- Communication with patients. Effective communication between the ACO and its enrollees is vital for engaging consumer cooperation and enthusiasm in the care process, and educating them about the availability of wellness, disease prevention, and other programs.
- Clinical and administrative data exchange. The ability to coordinate care relies on prompt and complete exchange of patient data between ACO providers and health plans.
- Public policy and regulation. The California Department of Managed Health Care has jurisdiction over ACO risk transfer agreements and may require the ACO to comply with financial solvency and other insurance regulations.
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