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Insurers cautious on accountable care

October 6, 2010

Health insurers, such as locally based WellPoint Inc. and Advantage Health Solutions, have been looking to work with health care providers to form accountable-care organizations. But insurers also worry that the accountable-care concept will become nothing more than a negotiating tactic by hospitals and doctors.

A letter written late last month by the top attorney at America’s Health Insurance Plans, a health insurance trade group, captures both the hopes and fears that health insurers have about accountable care groups, or ACOs.

“Those ACOs that face forward, representing novel and improved approaches to patient care and provider reimbursement, have tremendous promise. Those that face backward, however, representing simply the desire to engage in joint negotiation or aggregate market power, will leave consumers with decreased access, lower quality and higher prices,” General Counsel Joseph Miller wrote in a letter to federal Medicare administrators.

Currently, doctors and hospitals are restricted in how they refer patients to their own facilities, and they cannot engage in contractual relationships where one health care provider rewards another for referrals. Miller said those laws need to be upheld in general, with only “narrowly tailored exceptions or waivers.”

Accountable care is a lot like managed care, which was prevalent in the 1990s, in that it pays health care providers to take responsibility for the total health of a specific population of patients.

Managed care sparked a backlash from doctors, who preferred to be paid a separate fee for each service they perform. Accountable care tries to combine principles of both the managed care and fee-for-service systems.

The federal Medicare program has proposed contracts with accountable-care organizations that would be paid fees for each service, but also would be offered a bonus if the doctors showed they provided high-quality care and saved Medicare money. Under the health-reform law, these “shared savings” contracts will begin in January 2012.

But there’s wide room for doctors to negotiate other payment arrangements, both with Medicare and even more so with private health insurers.

In an August interview, Colin Drozdowski, WellPoint’s vice president of enterprise contracting and payment reform, said the Indianapolis insurer is interested in participating in ACOs where the providers are motivated primarily by improving care, not just improving their incomes.

“It’s not a one-size fits all. We don’t expect an accountable-care organization to exist in every market,” he said, adding that WellPoint won’t do one “if we don’t feel that there is a philosophical alignment there.” To read more about accountable efforts by WellPoint and Advantage Health Solutions, click here.

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