Managing Health Care Consumption & Health Care System | Mercer US

Read This Before You Pull the ACO Lever

Our Thinking / Healthcare /

Read This Before You Pull the ACO Lever
Calendar22 October 2015

Employers looking to control health costs and reduce excise-tax exposure face a dizzying array of levers to try. Cost shifting, consumerism, workforce health improvement … and now, accountable care organizations (ACOs). Where do ACOs fit in?

ACOs hold great promise. By changing the provider reimbursement structure to reward value instead of volume, and by providing delivery systems with resources and tools to better manage and coordinate care, they aim to deliver the right care with the right provider in the right setting. The health care system is fraught with waste and inefficiency, and ACOs look to curb that waste while improving quality outcomes. In the best-case scenario, an ACO could be a rare win-win for employers and workers.

But do all ACOs offer value? And what about the new fees that come along with them? ACO contracts typically include care-coordination fees to fund new clinical resources responsible for managing health care consumption and outcomes, along with new bonus payments for providers that meet quality and/or cost-control targets. Is the ROI sufficient to lower total health-care spend? How will these new fees be reflected in calculating plan costs for measuring excise tax liability?

Like most new innovations, results across ACOs are highly variable. In other words, if you’ve seen one ACO, you’ve seen one ACO. To understand how they can support your quest to avoid the excise tax, start by looking in your own backyard. Most national carriers have numerous ACO systems embedded in their PPO networks. Ask your carrier for detailed reporting on how many of your employees are accessing these systems. Ask what you are paying in fees and bonuses. Ask what types of savings you are achieving via these arrangements. Ask what type of growth they are anticipating in the prevalence of these arrangements in your key markets. Make sure that you are getting a favorable ROI, and, if you like what you see, explore ways to drive even more volume into these systems. And if you don’t like what you see, ask your carrier how they are addressing underperformance.

2018 is right around the corner. Will ACOs be the lever you pull to avoid the excise tax? They are certainly worth a close look.

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