General Insurance Article - AON Hewitt-Employers re ACOs to decrease Health Costs

Many Employers Interested in ACOs to Decrease Health Care Costs and Increase Value-Based Approaches, Says Aon Hewitt and Polakoff Boland

 Employers nationwide are beginning to explore the "Accountable Care Organization" (ACO)* model as a viable option to continue offering employer-sponsored benefits, while reducing cost and improving quality of care, according to a report issued today by Aon Hewitt, the global human resource consulting and outsourcing business of Aon Corporation (NYSE:AON) and Polakoff Boland, a national health care management consulting firm.
 This survey of 674 U.S. employers reveals that 28 percent are interested or very interested in exploring ACOs, while 37 percent are somewhat interested, 24 percent are unsure and 11 percent are not at all interested. Quality of care delivered is the top ranked factor by 82 percent of employers in evaluating the use of ACOs. This was followed by the ability to manage the total cost of care (81 percent), patient outcomes (66 percent) and plan/provider pricing transparency (47 percent).
 "ACOs are considered next-generation health care delivery models, consisting of teams of doctors, hospitals, and other health care providers and suppliers working together to coordinate and improve care for particular groups of patients," said Michael Cryer, MD and national medical director with Aon Hewitt. "ACOs reduce cost by providing plan participants the right care at the right time. 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."
 In addition, this survey 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 influencing employees in a positive manner and 71 percent of organizations said having different ACO networks or models to choose from would be a critical or important positive influence on workers. Conversely, 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 same related to the limited track record of ACOs.
 "It's clear that ACO proponents need to educate the public about the trade-offs between networks," said Phil Polakoff, MD, MPH, MEnvSc, and managing partner, Polakoff Boland. "ACO models help organizations reduce health care 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."
 * An Accountable Care Organization (ACO) refers to the organizational mechanism adopted by the Centers for Medicare & Medicaid Services (CMS) to implement the Shared Savings Program established by the Patient Protection and Affordable Care Act (PPACA). ACOs have also come to represent a broader value-based approach of delivering care whereby providers assume more financial risk, along with the opportunity of more financial reward for delivering better care at a lower cost.
 When asked to what extent each group should share in the ACO's cost management risk, employers cited medical groups the most (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. "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."

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