U.S. health insurer Cigna Corp. (CI) announced yesterday that it has successfully reached its 100 Accountable Care Organization (ACO) goal set in 2012. The company has travelled a long way since 2008, when its first ACO was formed with Dartmouth-Hitchcock in New Hampshire.
Effective Jul 1, Cigna entered into 11 arrangements in seven states, thus taking its ACO arrangements to 100. Cigna will serve one million customers through these ACOs.
The new agreements have been entered with Northeast Medical Group (NEMG) in Connecticut, Harbin Clinic and Physician Performance Network of Georgia/Tenet in Georgia, Presence Health Partners in Illinois, Skylands Medical Group in New Jersey, Primary Care Partners LLC and Wellmont Medical Associates in Tennessee, TheAustin Diagnostic Clinic, St. Joseph Health Partners and Village Family Practice in Texas and EvergreenHealth Partners in Washington.
What are ACOs?
ACOs are the most talked about new idea in Obamacare. These are organizations of health care providers that are jointly accountable for the quality, cost and overall care offered to patients. Such organizations target quality as well as seamless and exceptional service at an affordable cost. Their focus is on patient need and linking payment to outcome to improve the health of individuals and communities at minimal cost, particularly at a time when health care has become expensive.
Insurers form an essential part of ACO because these track and collect patient data, enabling the systems to evaluate patient care. Since clinical information and care processes are shared and supported by all providers, it becomes easier to manage care and effectively lower the cost. With Obamacare, health insurers have to be more than just an insurer or claims payer.
ACOs are appealing to insurers as these provide a way to reduce medical cost. Under health reform, insurers have lost flexibility in the ways that they can cope with rising medical expenses. They can no longer rely on many of their traditional medical underwriting strategies, such as exclusion of pre-existing conditions. The most effective approach for insurers now is to rely exclusively on current cost control mechanisms to manage members’ medical expenses. These mechanisms include price negotiation on services from health care providers and imposition of external controls such as prior authorization for hospitalization. An ACO helps insurers to accomplish these objectives.
Cigna’s ACO Strategy
Coming back, Cigna has been moving aggressively with this healthcare delivery model because of the promising results it has seen so far. Per the company, among the ACOs that have been in operation for more than two years, 73% delivered targeted quality care, an equal percentage of ACOs met the cost target and 55% achieved both cost as well as quality objectives.
The success of these ACOs comes on the back of Cigna sharing with other providers critical information related to its patients; its analytical predictive modeling capabilities which forecast patients likely to be discharged or readmitted, thereby developing post-discharge care plan to prevent recurrence of illness, and embedded care coordinators or registered nurses within physician practice, who scan though the information and make outreach calls to their patients to ensure follow-up care and resources. Other factors such as communication and collaboration, clinical integration, and aligning incentives to performance have also contributed to the program’s success.
Other ACOs
Some of the largest health insurers in the country, including Humana Inc. (HUM), United Healthcare Group Inc. (UNH) and Aetna Inc. (AET), are forming their own ACOs.
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