Will ACOs Replace Health Insurers?

Will ACOs Replace Health Insurers?

Ever since Accountable Care Organizations (ACOs) have come into existence some have speculated that these entities could eventually replace health insurers altogether. What often gets overlooked in these discussions is the critical role that health plans play in the delivery system and how the programs and support they provide are essential to making ACOs and other new payment models work.

Here are several reasons that ACOs will never replace health insurers:

First, health plans are in a unique position in that they see a patient’s entire interaction with the health care system.  Doctors and hospitals are limited to their direct interaction with the patients that come through their doors and information that patients tell them.  Health plans on the other hand see the whole picture.  Health plans have information on whether the patient is filling his/her prescription or getting care in another setting.  This information is critical to diagnosing patients correctly and helping to ensure they are getting the best care possible.

Second, rather than ACOs replacing health plans, the experience in the private sector demonstrates that health plans and the support they are able to provide to clinicians are essential to making ACOs work.  An article in the September issue of Health Affairs found that not all providers are equally prepared to enter into accountable care arrangements and that flexibility and the technical assistance and support of health plans is key to the success of these arrangements.  Unlike the Medicare ACO program which takes a one-size-fits-all approach, health plans are able to tailor these initiatives based on the readiness of providers and are able to offer assistance in a number of critical ways, such as helping to coordinate care and providing physicians with detailed, real-time data on how their patient population is doing.

Finally, if doctors and hospitals were to take on all of the responsibilities of health insurance they would then be subject to all of the numerous rules and regulations that govern health insurers today.  These include laws and regulations governing marketing, reserves, claims payment, underwriting, disclosure, and all of the new health insurance regulations included in the ACA, such as caps on administrative costs and regulation of premium rates.  It is not likely that doctor’s offices and hospitals will want to take on all of these responsibilities.  Even more, providers don’t have any experience managing risk – something health plans have been doing for decades.

Health plans do far more than just administer health insurance benefits and pay claims.  Too often policy discussions ignore all of the things health plans are doing to improve care and reform the delivery system – things that other stakeholders don’t have the ability, infrastructure, or incentive to do.  These include:

  • coordinating care for patients with multiple chronic conditions;
  • ensuring patients get appropriate follow-up care after a hospital discharge to avoid unnecessary complications and preventable hospital readmissions;
  • offering disease management programs to help patients manage chronic disease, including online resources, treatment and medication reminders, and access to 24/hour nurse hotlines;
  • offering support services for physicians, including access real-time data, care coordination services, and even imbedding nurse case managers into physician offices;
  • providing patients with information on quality, safety, and cost so they can make more informed health care decisions;
  • incentivizing patients to get preventive care, participate in wellness programs, and choose healthy lifestyles.

Here are other AHIP resources on what health plans are doing to reform the delivery system:

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