Anthem Blue Cross and Blue Shield’s vision for accountable care organizations foresees doctors and hospitals shifting to global capitation payments and employers getting bigger discounts if they allow their workers access only to health care providers in a specific organization.

Those are some of the details outlined by Todd Rankin, Anthem’s senior network development manager, in an April 13 slide presentation before the Indianapolis Association of Health Underwriters.

Anthem, a subsidiary of Indianapolis-based WellPoint Inc., is the dominant health insurer in Indiana, so its direction on accountable care organizations, or ACOs, will carry significant sway here. The ACO concept got a big boost from the 2010 health reform bill, which calls for the federal Medicare program to contract with hospitals and doctors that form such organizations. But private insurers like Anthem are eager to follow suit as well.

“No one seems to know exactly what an ACO is, but everybody wants one,” Rankin said in his presentation. He added, “We can’t continue with the status quo.”

The status quo is that health plans pay doctors and hospitals pre-negotiated fees for each service they perform. This fee-for-service system is easy to administer, but has been criticized for encouraging doctors to drive up their volume of services—whether it helps patients or not.

With health insurance premiums having doubled in the past decade and government budgets groaning under health care costs, the accountable care concept has emerged as the next great thing to rein in costs.

The idea is that doctors and hospitals would band together in an ACO to take on responsibility for the overall health of a specific population of patients. They would then be paid in ways that encourage them to keep those patients healthy, and not in need of major medical care.

Those methods of payment are the tricky part. Medicare proposed a system where the doctors and hospitals would get a cut of any savings they achieved by keeping patients healthy. It also is rolling out a system of bundled payments—for instance, making only one payment for a complex surgery—that would leave it to the hospitals and doctors to fight over who gets what cut.

Anthem is open to those concepts too, Rankin said. But the two models he presented clearly call for moving providers toward global capitation payments over the course of five-year contracts.

Such a system would negotiate a payment per patient for each year, which would attempt to price in differences for patients of differing health levels. If doctors and hospitals spent less than the negotiated amounts taking care of their assigned patients during the year, they would keep the difference. If they spent more, they would have to eat the losses.

One of Anthem’s models starts out with fee-for-service payments and one starts with global capitation payments with only partial risk. But by year four of both models, the health care providers would assume the full risk of the global capitation system.

If all this sounds familiar, that’s because the accountable care organization concept is nearly identical to the health maintenance organizations, or HMOs, that were popular in the early to mid-1990s. A key difference is that ACOs call for rewarding doctors and hospitals for tracking and scoring well on quality measures.

An ACO, Rankin noted, has been called by some as an “HMO in drag.” He said Anthem would look for health care providers who have the information technology systems that can easily track and report on how many patients have been screened for breast or colon cancers, for example, or for key indicators of chronic diseases, such as blood sugar and cholesterol levels.

“From a provider perspective, there’s a lot of concern. If there’s a lot of leakage [patients switching to doctors outside the ACO], how are they going to be able to control and manage the health of the population?” Rankin admitted. He added, “They’re also fearful about, 'What’s this going to mean for our reimbursement?'”

Anthem has initiated no ACOs in Indiana, although it has been in preliminary discussions with the state’s major hospital systems, Rankin said. WellPoint operates three ACOs in California and one in New Hampshire.

In California, WellPoint is offering employers access to ACOs on two pricing models. The first, like the HMOs of old, would cover the cost of an employees’ care only with doctors or hospitals that are part of a specific ACO. If the employee, or his or her family members, went to doctors outside the ACO, they would pay out of pocket.

For a higher price, employers could buy a plan that functions more like a PPO, or preferred provider organization. In those plans, out-of-pocket costs are cheapest when an employee sees a doctor in the ACO. But if he or she goes to a doctor outside the network, WellPoint will still pay a chunk of the cost.

“There’s a lot of unknowns and a lot of hesitation,” Rankin said. But, he added, "We’re looking to be in it for the long haul.”