Bertolini told analysts Aetna is now in contracts with 62 ACOs. “We have almost a million members in patients that are medical homes, which is 38% growth since the beginning of ’14 and over 760,000 members in what we call our high performance networks,” the Aetna CEO said.
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No matter whether Aetna (AET) makes a run at rival health insurers Cigna (CI) or Humana (HUM), the coming consolidation among those picking up the tab for medical care will continue thanks in part to the move away from fee-for-service medicine to value-based care and population health.
The health insurance industry deal speculation primarily focusing on Aetna’s ambitions comes just as the government plans to shift a huge amount of Medicare dollars away from the traditional fee-for-service approach to medicine that is based on volume and to medicine based on value that is tied to outcomes, performance and quality of care provided. Humana administers a large book of Medicare business Aetna may be interested in and larger amounts of capital may be needed to managed it from either insurer.
The Centers for Medicare & Medicaid Services earlier this year said half of all Medicare dollars will be paid to doctors and hospitals via “alternative” reimbursement models such as bundled payments and accountable care organizations (ACOs) that incorporate hospitals, surgical care and outpatient rehab by the end of 2018. Private employers and their insurer partners are upping the ante as well.
“Value based contracting now represents approximately 30% of Aetna’s medical spend with a goal to achieve 75% by the end of the decade,” Aetna chief executive Mark Bertolini told analysts and investors on the company’s recent first quarter earnings call.
But it’s expensive to implement information systems and related health IT to manage the care of populations of patients, ensuring they are getting the right care, at the right place and at the right time so consolidating to gain more efficiencies would make sense. Even as they reap billions in new revenue from newly insured Americans under the Affordable Care Act who can now pay for care, health plans are also investing billions of dollars in helping their networks of doctors and hospitals coordinate care to keep it affordable and low cost in the future.
Aetna, Cigna (CI), Humana (HUM) and Blue Cross and Blue Shield plans are aggressively trying to replicate and compete with the success of UnitedHealth’s fast-growing Optum business, which has seen quarter after quarter of double-digit percentage growth from consulting and providing technology services to doctors and hospitals implementing population health strategies. In the first quarter, UnitedHealth said Optum’s revenues of $3.3 billion grew 27 percent in part from “business expansion in population health management services for third party payers.”
Bertolini told analysts Aetna is now in contracts with 62 ACOs. “We have almost a million members in patients that are medical homes, which is 38% growth since the beginning of ’14 and over 760,000 members in what we call our high performance networks,” the Aetna CEO said.
Wondering how value-based care works under the Affordable Care Act? The Forbes eBook Inside Obamacare: The Fix For America’s Ailing Health Care System answers that question and more. Available now at Amazon and Apple.
