ACOs are Here to Stay, Even if the ACA is Not - Pharmaceutical Executive


ACOs are Here to Stay, Even if the ACA is Not

Pharmaceutical Executive

Two examples

Figure 1: Conceptual financial comparison ACO programs from BCBS of MA and CMS.
One private insurer that offers an ACO program is Blue Cross Blue Shield of Massachusetts, known as the "Alternative QUALITY contract." The multi-year ACO contract sets annual budgets for all BCBS of MA insured patients, encompassing the entirety of patient care (inpatient, outpatient, pharmacy, behavioral health, and other costs). The total payment from BCBS of MA is increased if the ACO reaches certain quality thresholds (up to +10 percent) and is adjusted for inflation. An ACO whose actual expenses are under budget can keep 100 percent of the savings under this program, but they are liable for 100 percent of budget overruns if they exceed the total payments.

Figure 1 shows conceptually how the BCBS of MA financial structure differs from the CMS Medicare Shared Savings Program in year one. Whereas the BCBS of MA contract allows the ACO to keep all savings (the amount above the red dotted line), the CMS approach forces the ACO to split savings with CMS (based on performance metrics). It is worth noting that the BCBS of MA approach could end up being more financially attractive for an ACO than entering an agreement with CMS.

Aside from having a greater potential upside, the BCBS of MA approach is a more comprehensive model than the CMS approach. The CMS approach only includes Part A and Part B expenses, notably excluding the pharmacy benefit (Part D). The BCBS of MA program includes a much wider range of patient expenses. The CMS program has an option for ACOs to enter the agreement with only shared savings (and no responsibility if there was a loss). The BCBS of MA approach has the ACO assume risk and reward immediately. So in some ways, the BCBS of MA program is a more progressive ACO concept (i.e., one that pushes the concept of the ACO farther) than the Medicare Shared Savings Program.

Not all private insurers are approaching ACOs in the same way, however. Aetna offers "Accountable Care Solutions" that incorporate tools to help ACOs with clinical decision-making and care coordination. Few insurance companies (and certainly not CMS) go as far as Aetna in terms of this kind of support. Aside from the ACO contract itself, Aetna offers clinical decision-making and care-coordination tools from ActiveHealth (acquired by Aetna in 2005) and health information support including tracking of quality metrics via Medicity (acquired in 2011). The kinds of tools offered by Aetna help address one of the biggest questions about ACOs: Will ACOs be able to identify and exploit efficiencies in order to stay under the budget? The broader question is still open. However, these kinds of tools could make the concept of forming an ACO more attractive to smaller provider networks that may not have the analytical capabilities of larger ACO organizations.

The BCBS of MA and Aetna approaches are just two of many varied ACO approaches being explored by private insurers today. In some cases, the private insurers are actually offering more progressive models for ACOs than CMS is offering under the Medicare Shared Savings Program. Private insurers are innovating the development of ACO programs.


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Source: Pharmaceutical Executive,
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