A report from Premier healthcare alliance has found that commercial payers do not offer as many of the upside-only payment arrangements for shared savings that are popular among early accountable care organizations (ACOs) as public payers do.
More than one-third of the 85 payer arrangements Premier analyzed were for upside-only shared savings, according to a news release Wednesday announcing the findings. Of all the upside arrangements, a majority, or 57 percent, fell within the Medicare Shared Savings Program or Medicare Advantage.
Other upside-only options were reported with Medicaid (7 percent), provider-owned plans (7 percent) and self-insured employers (7 percent).
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With the upside-only model, care management programs are established to manage high-risk and chronically-ill populations using claims analytics to predict outcomes, and savings that accrue from it are split between insurers and providers, with no penalties for failure to achieve the goals. Other lower-risk options include care management fees, but they do not offer the financial returns of shared savings.
Upside payment arrangements are lacking in commercial markets, the release said. Among the ACOs analyzed, only 21 percent of commercial arrangements offer upside shared savings, and those were in just four markets. In addition, agreements tended to be smaller in scope, usually for 5,000 covered lives or less.
"ACOs invest millions of dollars in permanent infrastructure, such as preventive care, chronic disease management, medical homes, technology and provider networks," said Blair Childs, Premier senior vice president of public affairs, in the release. "Shared savings helps offset the costs of these investments, as well as losses that come from decreased utilization."
Although commercial payers appear to be in the early stages of offering upside shared savings, nearly 70 percent of commercial payment arrangements to date have been limited to either care management fees or downside shared savings models.
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However, in exchange for the downside risk, commercial payers tend to be more generous than the Medicare program, offering savings splits that typically range between 50 and 80 percent, but can go as high as 100 percent if cost targets are achieved, the release said. By contrast, Medicare only offers a maximum of 60 percent of savings, even though the assumed risk is comparable in the public and private market.
The 22 ACOs in the study cover 1.8 million beneficiaries and participate in Premier's PACT Population Health Collaborative, a group of health systems developing value-based care delivery and population health capabilities.
"Particularly in the early years of accountable care, one-sided risk is a good way to get experience," said Joe Damore, vice president of population health management at Premier, during a telebriefing on Wednesday for reporters about the report. It allows providers to test care delivery models without the fear of financial losses, while also offering the chance to earn enough in shared savings to offset expenditures.
PACT ACOs also offered lessons for those entering accountable care. "Contracts can take on different forms depending on the organizations' readiness and ability to manage transitions," he noted in the release. "A key is implementing the care delivery changes at the same pace as the new payer arrangements."
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