Commercial accountable care organization products: Market leaders and trends
In 2006, Elliott Fisher of Dartmouth coined the term “accountable care.” Accountable care arrangements are based on three principles:
- Accountability for quality: A group of providers is clinically and financially responsible for the entire continuum of care for a group of patients. Depending on the arrangement, providers, hospitals, and health insurers may share responsibility for the patients’ care.
- Shared savings: Payers share savings with providers if certain quality and cost goals are met and spending growth is slowed. In certain arrangements, providers may also face payment reductions if they don’t meet specified goals.
- Performance measurement: Provider performance is tracked and rewarded based on process, outcome, and patient experience measures.
ACOs are networks of clinicians and hospitals who share medical and financial responsibility for the full continuum of patient care. The Affordable Care Act formalized the term by establishing the Medicare Accountable Care Organization (ACO) program and launching several other ACO models. More than 18 percent of hospitals across the country are estimated to be participating in some form of an ACO, with more expected by the end of 2014.
Simultaneously, many private sector health plans have launched an ACO network that they offer as a distinct insurance product option to individuals and employer groups. These products are based on contractual agreements with selected providers who are chosen based on financial and quality measures. Often, they are offered through Health Maintenance Organization (HMO) or Preferred Provider Organization (PPO) structures to encourage members to receive care from network providers.
This paper describes activity concerning commercial insurance products based on ACO networks.