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Providers, insurers debate ACOs

Bridgeport Hospital

Bridgeport Hospital, a member of the Yale-New Haven Health System, has yet to embrace accountable care organizations. Photo courtesy of Bridgeport Hospital.

As health care providers and insurers seek to balance quality against rising costs, a model known as accountable care, which holds providers responsible for keeping patients’ costs in check, has gained steam nationwide.

In Fairfield County, however, the region’s largest medical provider has yet to embrace accountable care organizations (ACOs), with a top executive contending that the framework defining what an ACO is remains “extremely vague.”

ACOs began to gain momentum following the passage of the Affordable Care Act, which authorized the federal Centers for Medicare and Medicaid Services to create programs that offered health care providers incentives for cutting costs while maintaining or improving the quality of care.

Under the health reform bill, providers that form federally approved ACOs would be eligible to share in cost savings realized by the government through the limiting of redundant, overlapping or unnecessary treatments for Medicare or Medicaid patients.

At Bridgeport Hospital, which is a member of the Yale-New Haven Health System, CEO William Jennings said there is still too much ambiguity surrounding ACOs.

“An ACO is an effort to provide care and shift risk for the cost of that care to a provider,” Jennings said. “This is not novel, it’s not new. It was tried in the mid-90s without success.”

Jennings said neither Bridgeport Hospital nor any of the other providers that comprise the Yale-New Haven network have formed an ACO as of yet. “We’ve studied them and we’ve made a deliberate decision not to proceed into that realm yet,” he said. “The language is about as vague as you can imagine.”

“We know that the insurance industry has some key competencies that we don’t have yet, so the opportunity to partner is certainly out there,” Jennings said, but added there is nothing specifically in the works.

Instead, Jennings said, Bridgeport Hospital and its partners in the Yale-New Haven network are focused on integrating an electronic medical records system and on clinical integration with the various physicians and other health care practices that also treat the hospital’s patients.

“We have to find more creative ways to avoid duplication and to consolidate resources — and that gets back to that original formula of driving value,” Jennings said, adding that integrating best practices and administrative functions among all of the Yale-New Haven system members would contribute to lower overhead costs.

While the cost-saving construct outlined by the Affordable Care Act pertained specifically to providers handling Medicare and Medicaid patients, private health care providers and insurance companies have been forming similar accountable care partnerships since well before the bill’s introduction.

To date, a collaborative accountable care initiative launched four years ago by Cigna Corp., a global health insurance company based in Bloomfield, has been implemented in partnership with 42 U.S. practices.

“We’ve been very active in that area,” said Cigna spokesman Jon Sandberg. “We have 42 in place and we’re heading toward over 100 over the next couple years.”

As measures prescribed by the Affordable Care Act are implemented over the coming year, Sandberg said, “We do believe it’s crucial that the law be supplemented with innovative incentives that encourage providers to improve their health care management.”

Likewise, Hartford-based Aetna Inc. has formed ACOs with 11 health care providers located across the country, said spokeswoman Susan Millerick.

“We have something like 26 in letters of intent and close to 200 in the pipeline,” she said.

Millerick said that full implementation of the Affordable Care Act would “have a dramatic effect on insurance rates,” suggesting that the cost-saving principals built into ACOs represent a significant opportunity for both providers and insurers.

“We’re continuing to try to find new ways to change the structure of reimbursement for care, and you’re seeing a lot of that now,” she said, adding that ACOs aim for better communication between providers and patients and for the elimination of waste in the system.

“As much as one-third of all health care services are wasted,” Millerick said. “Health care costs continue to grow at three times the rate of inflation … these are real numbers — these are real challenges.”

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Patrick Gallagher

Bio: Fairfield County Bureau Chief Staff Reporter Westchester County Business Journal Covers: Economy, energy, government, infrastructure and public works projects, law, media, technology Phone: (914) 694-3600, ext. 3017

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