Are ACOs fundamentally flawed?

Many of the hundreds of accountable care organizations being created around the country are doomed to fail, three healthcare experts argue in a commentary in The Wall Street Journal.

They maintain the ACO model is largely based on flawed assumptions about the personal and economic behavior of doctors and patients. The concept mistakenly assumes ACOs can be successful and save money even if doctors don't make major changes to how they provide care and patients don't change their behavior or assume accountability.

To achieve high-quality, low-cost care, the industry needs to embrace reform approaches that go beyond the ACO model, such as shifting more care to less-expensive walk-in clinics staffed by nurse practitioners, according to the WSJ commentary.

The healthcare experts also recommend revising protective licensing procedures to allow, for example, highly trained nurses to administer anesthesia for some types of procedures, rather than anesthesiologists, according to the WSJ commentary.

Meanwhile, just last week the National Committee for Quality Assurance announced its first six accredited accountable care organizations: HealthPartners in Minnesota, Billings (Mont.) Clinic, Children's Hospital of Philadelphia, Essentia Health in Minnesota, Kelsey-Seybold Clinic in Houston, and Crystal Run Healthcare in New York. The voluntary NCQA accreditation, based on an assessment of 14 standards and 65 elements, is valid for three years.

Mid-market firms charged higher premiums for health insurance!

Mid-market companies on average were charged substantially higher premiums for group health insurance coverage in 2012 than larger firms, according to a study released Monday by Automatic Data Processing Inc.

Companies with between 1,000 and 2,499 full- and part-time employees were charged an average $10,351 per employee in 2012, 16% more than employers with more than 5,000 or more workers and 8.3% more than employers with between 2,500 and 4,999 workers, according to ADP's study. The average annual per-employee premium cost across all employers surveyed was $9,562.

Chris Ryan, ADP's vice president of strategic advisory services and co-author of the study, said in an email that several factors are likely to blame for midsize employers' cost disadvantage.
Midmarket firms “lack the size and scale needed to negotiate more favorable agreements with health plans, networks and TPAs. They are also less likely to operate self-funded health plans with the potential to reduce premiums,” Mr. Ryan said, adding that recent ADP research also suggested that “larger employers are more likely to have the financial wherewithal to provide employees with a health and wellness program to help contain premium costs.”
“Larger employers may be more effective in communicating and implementing consumer-driven health plans, and may also have more effective practices for conducting audits to ensure member eligibility,” Mr. Ryan said.

ADP's “2012 Study of Large Employer Benefits,” the first of its kind for the Roseland, N.J.-based payroll processing firm, examined health care costs and participation rates among 300 employers with more than 1,000 employees. In total, the study encompassed more than 2 million covered lives, including employees and their dependents.
Beyond headcount, certain other demographic factors were found to be predictive of higher-than-average health benefit costs. Manufacturers, professional and scientific services firms, health care providers and information technology firms were charged between 3% and 13% per employee per month more for group health benefits than the average employer, according to ADP's study.

In part, those industries' higher health care costs were driven by the average age of their respective workforces. Manufacturing companies were charged $899 per employee per month in premiums, the highest of any industry surveyed, and had an average employee age of 45.5 years. Conversely, employers in the hospitality and food services industry incurred the lowest monthly per-employee premiums in 2012 ($596) and the lowest average employee age (36.9 years) of any industry group surveyed.

Other factors such as geographic location and the “richness” of the benefits provided contributed to the disparity in benefits costs among industries, the study noted.