Private-market payers can get more for their money

November 1, 2010

Consolidation is going to heat up in healthcare for two reasons

Consolidation is also going to heat up in healthcare for two reasons.

Fueled by the need for more leverage, medical practices will merge or enlist with local health systems. Unfortunately, when the provider community consolidates, the costs of medical services rise. It happened in the late 1990s, and some payers continue to fight those effects to this day.

ACO models bring providers together to coordinate comprehensive care-with the promise of financial rewards from Medicare starting in 2012. To gear up for the arrangement, providers are looking at mergers to expand future capabilities and maximize rewards.

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Although ACOs are designed for Medicare, private payers can also use the model to tie reimbursement to accountability for their members. Payers don't need to bulk up in size and leverage just to force a counteroffer from providers. CIGNA, for example, recently created an ACO pilot with Piedmont Physicians Group in Atlanta.

"This is the first time in history that physician provider groups are sitting at the table with us and having meaningful, collaborative dialog around sharing information and resources to increase quality and decrease the unnecessary costs," says David Epstein, MD, CIGNA's senior medical director for Georgia.

The program, which began July 1, incorporates 10,000 individuals covered by a CIGNA plan who receive care from a group of more than 100 Piedmont primary care physicians. It's the first ACO in the state.

The differentiating clinical feature of the program is a registered nurse who is available on site in doctors' offices-employed by Piedmont but funded by CIGNA. The nurse can tap into CIGNA data to coordinate care, while also providing patient communication, appointment scheduling and education around clinical programs.

Using CIGNA data-such as claims and case-management information-to help drive improved outcomes is one of the core strengths of the program, Dr. Epstein tells me. In the past, most providers saw little use for payer data, but that thought is changing.

The plan pays the physicians as usual for services, plus reimbursement for care coordination and additional rewards if they meet targets for improving quality and lowering medical costs.

"It's not an upfront fee schedule and then have a nice life," he says.

Typical care-coordination models have relied on NCQA medical-home certification as a benchmark to increase fee schedules. The new CIGNA model goes beyond that, offering payment for real-world outcomes-not just process-based capabilities.

"I can't state it clearly enough that the culture is beginning to change relative to the potential relationship building between the provider community and the plans," he says. "Whatever reform we have success in doing, it's going to have to include partnership between plans and the provider community."

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at julie.miller@advanstar.com