Thought Leaders’ Corner: Trend of “Product-Based” ACOs – an Insurance Product Partnership Between a Health Plan and a Respected ACO

Accountable Care News October 2015

Doug Hastings, Chair Emeritus of the Firm, based in the firm’s Washington, DC, office, authored a thought leadership article discussing the trend of product partnerships between health plans and respected Accountable Care Organizations.

The following appeared in Accountable Care News:

Q. Will the creation of “product-based” ACOs—an insurance product partnership between a health plan and a respected ACObecome a new trend going forward?

Doug Hastings wrote:

It already is a trend. With the onset of value-based payment, provider organizations are required to enhance their infrastructure for care coordination and assess their readiness to assume all or a portion of the financial risk for clinical outcomes and the health of populations. This is driving horizontal consolidation among providers, but also collaborations between providers and payers.

Most providers of reasonable size today have an ACO or ACO-like vehicle that contracts with payers for both hospital and physician services (and in some cases post-acute as well). They all face a build or buy question as to insurance products. Many provider organizations own an insurance company component or are building/acquiring one. Others are joint venturing signature insurance products, especially narrow network products, with one or more payers in their market. Most are looking to do direct arrangements with large employers, sometimes with a payer partner, sometimes not. No reasonably-positioned provider system or ACO wants to be a mere “vendor” to insurers in the future as value-based payment continues to expand. They want to be a full partner in the transformation process.

My observation is that not only are providers/ACOs very uneven around the country in their readiness for value-based care and financial risk, payers are equally uneven in their readiness/willingness to equitably share with providers traditional insurer responsibilities and the financial benefit of better care and lower costs.