Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Value-Based Care News

Examining Private Payer ACO Contracts

By Ryan Mcaskill

A new study asked providers to discuss their risks and rewards experienced with private payer ACO contracts.

- Recently, the American Journal of Managed Care released a report that examined the ACO model that is currently be used by private insurers and federal and state governments. Specifically, the study examined the prevalence of private payer ACO contracts and the characteristics of contract structures or how these compare with public ACO contracts.

According to the report, this provides some of the first comprehensive evidence into the nature of private payer ACO contracts and how they compare to other options in the ACO landscape. These are relatively new as the initial pilots were launched in 2005, with broader programs being approved in 2012, The private contracts have only been around since 2009.

The study analyzed a cross-section of the National Survey of ACO contracts with public and private payers and private payer contract key characteristics. It was also designed to examine the perspectives and outlook of their leaders. The survey featured interviews about ACO contracts, leadership, structure, organizational capabilities and local context, as well as the ACO model.

The study found that 51 percent of respondents had an ACO contract with a private insurer, two-thirds had an ACO contract with Medicare that was established through either the Medicare Shared Savings Program or the Pioneer Program, while 25 percent had a Medicaid ACO contract. On top of that,  57 percent of ACOs only had one ACO contract.

The study also asked respondents to describe their interactions with the their largest private insurer ACO contract. According to respondents, 69 percent were shared savings models and 56 percent included downside risk either through capitation, global budgets or shared savings models that included shared losses. This is substantially higher that the 7 percent of Medicare Shared Savings Program contracts that include risk.

There were several requirements that impact shared savings which include quality performance and upfront payments. Nearly all contracts (98 to 100 percent) hold ACOs responsible for costs associated with emergency department care, outpatient care, inpatient care, labs and x-rays, advanced imaging and professionals services. Fewer of them include other factors like pharmacy (78 percent), durable medical equipment (78 percent) mental health or substance abuse services (60 percent) and vision, hearing and speech services (50 percent).

Despite the risks that come with an ACO contract, more than 60 percent of respondents “agreed” or “strongly agreed” that their behavior would influenced targeted cost and quality of goals.

“As performance information becomes available, it will be important to understand nuances in contract design and association with differences in cost and quality,” the reports reads. “Learning across Medicare, Medicaid, and commercial contracts can allow each to learn from one another and iteratively work toward the best possible contracts. This information will enable public and private payers to learn which types of contracts and incentives work best in different contexts and how to improve ACO contracts.”

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