Compensation Monitor

As ACOs grow, new payment models explored

If accountable care organizations (ACOs) are to reach their full potential, the traditional fee-for-service approach that dominates today must be revised. As the ACOs take form, payers look to establish shared-savings programs and other payment models in an effort to create financial incentives for high-quality care.

A new report from the Commonwealth Fund, titled “Promising Payment Reform: Risk-Sharing With Accountable Care Organizations,” summarizes the research conducted on the ACO shared-risk payment models, with a specific focus on private insurers. For the review, the models had to include these criteria: a provider risk-sharing component, a broad array or full continuum of patient care/services, and meaningful quality incentives. Four approaches to shared-risk payment are: bonus payment at risk, market share risk, risk of baseline revenue loss, and financial risk for all or part of the patient population.

Key findings:

  • Payer-provider shared-risk models are in the early stage of development. Other than the traditional capitated HMO, there are few operational shared-risk models.
  • Definitions of shared risk vary, and shared-risk programs use a variety of program designs.
  • Providers lack the infrastructure needed to take on and manage risk, but some payers are providing support.
  • Shared-risk models have evolved from shared-savings programs.

Eight shared-risk models

Of models that are operational, three of the eight began operation early this year. The longest-standing shared-risk program is Medica Health Plan, launched in 2008, followed by Blue Cross Blue Shield of Massachusetts, begun in 2009.

Payer Existing shared-risk model Developing a shared-risk payment model
Blue Cross Blue Shield of North Carolina
Blue Cross Blue Shield of Illinois
Blue Cross Blue Shield of Massachusetts
Horizon Blue Cross Blue Shield of New Jersey
State Employees Health Commission of Maine

Source: Delbanco SF, Anderson KM, Major CE, Kiser MB, et al. Promising payment reform: Risk-sharing with accountable care organizations. The Commonwealth Fund, July 2011

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