Aetna and MemorialCare Health System have joined hands to lower premiums for employer-based PPOs in Orange and Los Angeles counties while financially rewarding doctors for better care, the companies announced Wednesday.
The so-called accountable care organization is the latest such venture for Memorial, the Fountain Valley-based nonprofit, which struck a similar deal last year with Anthem Blue Cross for care of patients with chronic conditions.
The companies said the ACO could immediately reduce premiums by as much as 15 percent through a narrower network of providers who work to coordinate care, reduce unnecessary costs and improve communication with patients.
“People hear a lot about the Affordable Care Act and that costs should be coming down,” Memorial CEO Barry Arbuckle said. “We are confident this product will be able to deliver what was behind the thinking of the Affordable Care Act: Focus on prevention, focus on the patient experience, reduce the cost.”
Arbuckle added: “As we reduce the cost of care and premium cost to the employer goes down, we expect that to translate into reduced cost share for the employee.”
Memorial’s hospitals include Saddleback Memorial in Laguna Hills, Long Beach Memorial and Orange Coast Memorial in Fountain Valley.
Last month, Aetna announced plans to buy rival Humana for $37 billion, a deal that would make it the third largest U.S. insurer.
The program will be rolled out from October through early 2016. An Aetna spokeswoman said executives were not available for comment Wednesday and that she did not have figures on how many Orange County employees would be enrolled in the program.
Shana Alex Charles, a health sciences professor at Cal State Fullerton, said with the improving job market, employers may be inclined to reduce employees’ costs, but that they aren’t required to do so.
“As an employer, you might just pocket that to help your bottom line,” she said.
Arbuckle said a large portion of compensation for Memorial’s doctors will be tied to measurable quality outcomes, such as percentage of patients undergoing preventative screenings, reductions in emergency room visits and better management of patients with diabetes or heart failure.
Dylan Roby, an expert on the California insurance market and a professor at the University of Maryland School of Public Health, said that in more standard PPO agreements, providers are paid a rate that doesn’t change regardless of outcomes.
“In this case, if the provider is being told to meet certain benchmarks in order to be paid, Aetna can assume less of the risk even if things do go badly,” Roby said via email. “The 15 percent savings vs. other Aetna products seems possible if MemorialCare is able to deliver on significant reductions in ER use, readmissions and achieve better management of chronic illnesses.”
Charles noted that it’s also important to make sure doctors feel they are paid fairly. “You have to have the providers feel like their work is valued and they’re not just being tied to checklists,” she said.
In addition to Orange County, the partnership includes parts of Los Angeles County, including Long Beach. Plan beneficiaries will have access to 2,000 doctors, more than 40 urgent care centers and seven hospitals.
Contact the writer: 714-796-3686 or cperkes@ocregister.com
