Employers look to ACOs to increase value, keep costs in check

By Chris Anderson
12:38 PM

A new report from human resources consulting firm Aon Hewitt and healthcare consulting firm Polakoff Boland says employer interest in accountable care organizations is ramping up as they seek new ways to continue offering healthcare benefits to employees.

“Seventy-seven percent of employers are unlikely to exit healthcare management when health insurance exchanges become available starting in 2014,” the study authors noted. “This finding indicates that employers intend to remain ‘in the game’ of offering healthcare benefits for the foreseeable future. Sixty-five percent of respondents have expressed interest in exploring the use of ACOs as an option for providing healthcare benefits to their workforce.”

In the June 2011 report, employers cited both quality of care (82 percent) and the ability to manage healthcare costs (81 percent) as the top reasons they were interested in ACOs. Sixty-six percent of respondents cited patient outcomes and 47 percent said plan and provider pricing transparency were other reasons they were interested in ACOs.

"ACOs reduce cost by providing plan participants the right care at the right time," said Michael Cryer, MD, national medical director with Aon Hewitt in a press release. "By improving access to primary care, plan participants can avoid emergency room visits, which results in a financial reward for the ACO and shared savings with the sponsoring organization or organizations."

The report also detailed which factors employers felt would most influence employee acceptance of the ACO model for their health benefits. It found that 87 percent of employers believe having a primary care physician in the ACO would be a critical or important positive influence on employee acceptance of the model. Nearly 80 percent said awareness or reputation of the sponsoring organization is critical or important in positively influencing employees and 71 percent said having different ACO networks or models to choose from would be a critical or important positive influence on workers.

“Given that two-out-of-three top-rated factors are quality-related contradicts the notion that employers are only focused on cost. The implication for ACOs – and all other delivery systems – is that ‘quality sells,’” the report noted.

However, 74 percent of employers indicated that limiting patients to only ACO network providers for care and services would be a significant negative influence on employees and 66 percent said the limited track record of ACOs would have a similar negative influence.

"It's clear that ACO proponents need to educate the public about the trade-offs between networks," said Phil Polakoff, MD, MPH, MEnvSc, managing partner, Polakoff Boland. "ACO models help organizations reduce healthcare cost, waste and inefficiencies, as well as support the movement from volume to value-based approaches."

This volume to value-based shift can be seen in various employer practices today, such as pay for performance, accountable quality contracts, incentive compensation and bundled payments, which can serve as strong examples of similar successful models to employers and employees alike.

Educating employers on what ACOs are and how they function would be a good place to start to generate more employer interest, as only about 41 percent of employers said they are “very familiar” or “somewhat familiar” with ACOs.

When asked the extent that each group should share the cost risks of ACOs, employers were split with medical groups cited by 23 percent, followed by hospitals (22 percent), health plans (21 percent), employers (18 percent) and employees (15 percent).

"The most feasible way to improve care and pricing is for health plans – and federal/state governments – to structure risk contracts with providers whereby physicians and hospitals are responsible for doing 'the right thing at the right time at the right cost,'" Paul Klein, principal in the Health & Benefits practice with Aon Hewitt, said in a prepared statement. "That is the essence of accountability and will likely be the cornerstone of collaboration among stakeholders about how to drive efficiency and quality in the years ahead."