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

Value-Based Care News

Benefits of Forming an Accountable Care Organization

By Ryan Mcaskill

Executives of a newly formed ACO discuss the decision to form, the reasons behind it and the benefits to come from it.

- At the start of 2015, a three year partnership went into effect between Health Net California and John Muir Health. The organizations created an accountable care organization (ACO) that aims to serve Health Net members utilizing John Muir Health’s medical centers and physician network.

In an interview with, Chris Ellertson, regional health plan officer for Health Net and Lee Huskins, President and Chief Administrative Officer for John Muir Health’s Physician Network, spoke about why they decided to make this move, what the benefits are and why it is important. Why form an ACO?

Lee Huskins: John Muir Health is a top-tier integrated delivery system dedicated to the three-part aim of improving the health of a population of patients, improving patient experience in receiving our high quality care, and providing affordable care.  In addition to the new Health Net ACO, John Muir Health participates in two other ACOs (Blue Shield and Medicare Shared Savings Program) that have achieved our goals to lower costs, enhance quality and service, and increase access to John Muir Health.

In fact, as indicated in the CMS report on the first year performance of its Shared Savings Program for Medicare, John Muir Health was the top performing Medicare ACO in California.  We see development of and participation in ACOs as an important part of our future as we move from a fee-for-service based payment system to population-based models based on quality, safety and the patient experience.

READ MORE: FFS, Risk-Based Medicaid ACO Programs Similarly Reduce Costs

Chris Ellertson:This ACO structure enhances the relationship that Health Net already had in place with John Muir Health. Our two organizations collaborate more closely to share and refine tools and resources that improve the health of our members and enhance the patient experience, including quality of care and Health Net members’ access to John Muir hospitals and physicians. What went into creating this partnership?

LH: We have been speaking with Health Net for some time about development of an ACO — we have mutual goals around reducing the cost of care for consumers and purchasers of coverage, while maintaining access to quality care.

 Chris Ellertson, regional health plan officer for Health Net.

Chris Ellertson, regional health plan officer for Health Net.

CE: We worked together for more than one year to create this partnership.  Through regular meetings and discussions that involved senior leadership from both organizations, we first worked to define the ACO’s strategic intent and alignment of our respective organizations.  From there, the core development of the ACO involved multiple work streams that included assessing and developing an operating model, analyzing opportunities and calibrating priorities, financial modeling, and identifying and monitoring critical milestones.  While our ACO partnership officially began January 1, 2015, the commercialization of our collaboration is intended to further migrate and develop over the next three years. How did the affordable care act factor into this decision?

READ MORE: CMS Reopens Next Generation ACO Application Request Portal

LH: It played a significant role. The ACA is moving the health care system in the United States away from a fee-for-service model to an emphasis on population health. As a health system, we are increasingly be held accountable for providing the right care at the right time and in the most appropriate setting with an emphasis on quality, the patient experience and cost. Under this model, partnering with health plans such as Health Net to develop ACOs makes sense. What other trends factored into this decision?

LH: John Muir Health is in a very competitive market with large providers such as Kaiser Permanente and Sutter Health. Patients have many options and increasingly they are shopping for the best value, which translates to high quality care at a price they can afford.

We have been working diligently for the past several years to lower our costs to become more affordable so that patients can access us for their care while maintaining our high-level of quality and service. ACOs are one way that we can translate these efforts into working with health plans to provide competitive premiums for patients who want to access John Muir Health for their care.

CE: Cost remains a key driver to health care purchasers.  By further improving the quality and the coordination of patient care – including providing care at the right time and in the most appropriate setting, health care cost trends can be lowered. In turn, this will create value for our customers through improved health outcomes and decreased pressure on health insurance premiums.

READ MORE: 61% of ACO Contracts Only Include Upside Financial Risk What does Health Net hope to get out of this partnership?

CE: We expect to optimize a comprehensive data-driven approach with John Muir Health to identify the common health management needs of our members and ensure that we have the right clinical programs and interventions to address their needs and to improve their health outcomes.  Sharing data both ways is key to this approach.  Also, reaching and engaging our members and ensuring that we are optimizing all available methods and tools to detect treat and prevent disease and maintain wellness will be an important aspect of our partnership to making health care work for our members. What does John Muir hope to get out of this partnership?

LH: This partnership is well-aligned with our efforts to lower costs, enhance quality and service, and increase access to John Muir Health. We’re committed to engaging patients as partners in their care to help them maintain and improve their health. We look forward to working collaboratively with Health Net for our patients on this effort. How will this impact your revenue cycle?

LH: Our ACO relationships have not had an impact on revenue cycle as we are compensated with value-based payments based on our ability to provide quality care and a great experience at a lower overall cost for these defined populations.



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