Future of ACOs &

Payment Innovations

Ernie SchweflerRegional Vice President Network Management & HMO Strategy

November 2, 2011

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Topics for Today

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Increasing Premiums

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California Premiums vs. Inflation

Cumulative Premium Increases Compared to Inflation, California, 2002 - 2010

Sources: California Health Care Foundation; California Employer Health Benefits Summary Survey 2007-2010; California Division of Labor Statistics

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Since 2002, health insurance premiums in

California have increased by 134.4%, more than five times the 25.4% increase in California’s overall inflation rate.

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The marketplace can not sustain this trend. Traditional methods to keeping costs down have not been successful enough.

5x increase

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Improving Value and AffordabilityNew Model:

Rate increases tied to quality, safety, and value

Old Model: Rate increases not tied

to value

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Reforming the Delivery System: Changing the way members access and receive health care

The delivery system is constantly improving -

continuous innovation leads to higher quality and lower costs

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A Balanced Approach: A Menu of Solutions

Accountable Care Organizations

Bundled PaymentsSurgical Services

Patient Centered Medical Home

Payment for Quality Enhanced reimbursement for value-based quality behavioral changes

Enhanced Fee For Service

PCMH

Population Based

Payments

Episode Based

Payments

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Anthem ACO

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ACO Work Groups

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Linking Patients to Providers (attribution)Linking Patients to Providers (attribution)

HMO PPO

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Both plans and ACOs recognize limits of attribution logic in current PPOs

Solutions for AttributionSolutions for Attribution

Working together on new PPO product designs that would favor use of ACO providers with three tiers of benefits in 2012

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Payment Methods: StructurePayment Methods: Structure

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ACO Model 2011:  Shared Savings –

Quality Gate

Quality Gate

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Physician Quality Metrics

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Hospital Quality Metrics

Can participate in Shared Saving if passed Quality

Gate

Note: Points are scored based on both improvement and an attainment threshold

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Payment Method: Calculating SavingsPayment Method: Calculating Savings

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Hard for the PPO to delegate CM for enrollees who are affiliated with ACO but not for other enrollees in PPO (who are not in an ACO)

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Variation in breadth of CM programs operated by the PPO for different employers

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Variation in breadth of CM programs across ACOs•

Large employers often carve DM/CM out to specialty companies

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Some PPO customers dislike care management; that’s why they are in the PPO

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Data exchange between PPO and ACO is imperative but difficult

Delegation of CM is difficult in PPODelegation of CM is difficult in PPO

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ACO Critical Pathways

•Align incentives:

quality improvement and cost reduction require careful 

discussions.

•IT Development:

must involve the IT department early in the process to 

assure that it has the data and infrastructure needed to support

integration. 

•Transparency: 

participants 

commit 

to 

the open 

sharing of performance data across the organizations.

•Dialogue:

initial step is beginning a dialogue with community 

physicians/ACO partners.

•Flexibility:

process of refining and improving ACO performance is ongoing. 

The ACO is a dynamic organization; Stakeholders must be equipped

to 

adapt and execute.

•Resources:

carefully assessing the current environment and taking 

inventory of available resources and identify additional needs. 

•Time:

requires substantial time and ongoing internal and external 

support.

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Questions