Purchasers are inclusive of employers or an entity purchasing benefits on behalf of employers.  For example, the San Francisco Health Service System purchases on behalf of four employers: the C&C of San Francisco, SF Unified School District, SF Community College District and the Superior Court.

There are typically state-level insurance regulations regarding the level of risk transfer, potential benefit mandates and other requirements for risk bearing entities that may create challenges for a multi-state employer. From an employer perspective, the objective is to better align goals across the delivery system, motivate investments in care redesign, and improve quality while managing the total cost of care through physician and hospital shared risk rather than merely transfer of insurance risk.

Boeing uses a number of access, care coordination, health status and quality outcomes measures – most of which are standard NQF measures. Meeting the quality performance goals is a threshold for financial gainsharing. The San Francisco Health Service System, working with the plan and provider partners, also use a variety of quality and utilization reporting measures.

Regardless of whether claims are managed by a plan or TPA, or whether the contracting accepts and manages capitation, key success factors are:

Communication and timely exchange of information, including notification of admissions and Emergency Department visits, management of care transitions and care coordination.

Joint management review of quality and utilization performance information to identify quality improvement opportunities, while also targeting potential areas of savings and waste reduction, such as duplication of services, generic drug substitution, and avoidable utilization through improved care coordination.

Alignment of financial incentives that motivate care redesign are important for sustaining care improvement – deeper discounts or provider steerage tend to produce one-time savings but do not generate lower trends over the long term.  Providers need to work collaboratively to reduce variation in care and use the site of service that supports a better patient experience and manages resources efficiently.

Feedback has been positive in many areas. Absent a collaborative process and regular meetings, providers are not necessarily motivated to respond to typical utilization reports nor empowered to develop crosscutting solutions.  Often, individual physicians are not aware of the degree of variation in care.  The quality and utilization feedback reports common in an HMO environment may not be deployed for PPO-contracted providers.  Provider ownership of identified opportunities and collaborative problem-solving are important elements.  To the extent that provider organizations have also invested in resources for case management support of high risk individuals, such as through Boeing’s Intensive Outpatient Care Program, primary care physicians and their office staff have reduced administrative burden.

The structure of these ACO arrangements is less about the discounts (in some cases the health plan-negotiated contracts are still in force) than the commitment to jointly established objectives for managing the total cost of care and creating a better patient experience.

Boeing provides technical support in the adoption of care management infrastructure to support members with medically complex needs.  The purchasers manage the relationships internally with limited support from their benefit consultants and legal counsel. Both organizations also use data warehouse vendors.

In both instances, the health plan maintains this role, noting that for the San Francisco Health Service System, Blue Shield HMO maintains the contract with the ACO and capitates professional services to medical group organizations, which in turn are delegated for claims administration.  Boeing continues to use its third party administrators to pay claims and perform the other functions normally done by an insurance administrator.

Boeing piloted the Intensive Outpatient Care Program (IOCP) for high risk individuals and identified care support processes to improve the care experience and reduce/manage risks for these members. The experience was documented in a Health Affairs blog. PBGH subsequently was awarded one of the Center for Medicare and Medicaid Innovation grants to spread the IOCP model among 20+ provider organizations – two of those organizations are also part of the San Francisco Health Service System network. Key elements include engaging primary care physicians to refer members and recommend participation, initial face-to-face meetings with the nurse/care coordinator, multidisciplinary staffing (including behavioral health, social work, pharmacy) with medical director oversight/support as needed in the provider organizations to offer comprehensive member support.

Considerations include membership volume, geographic concentration, provider organization track record and experience in a given marketplace (prior experience with risk or capitation), constellation of physician group-hospital contracts or preferred referral arrangements, infrastructure, plan-provider relationships, types of care redesign innovation in play, alignment with other local, state or federal initiatives (e.g., experience in CMS MSSP).

A direct relationship allows for greater customization of program design, including network composition, care design elements, performance measures, risk or gainsharing arrangements.  Direct contracting also requires more hands-on management and oversight on the part of the employer.

Working with a payer leverages existing data and network management capabilities.  Program design may be more consistent across geographies for a multi-state employer.  Considerations include the structure of the agreement (including access fees and incentive design), performance measures, gainsharing, data and information transparency and differentiation of ACO arrangement relative to traditional network offerings.

In either case, the employer may have a variety of options around benefit design incentives (e.g., waiving or reducing primary care copayments/coinsurance), contribution strategy, and out of network coverage and cost-sharing rules.

Frequency may vary depending on prior provider experience and stage of implementation, and if it is a direct contract with an employer or through a carrier. More frequent meetings may be common during implementation, with perhaps a transition to quarterly once reporting processes and governance are established. Meetings may also be increased in frequency to monthly if service or operational issues are identified.