With consumers and employers looking to trim coverage costs while ensuring high-quality care, public and private insurance exchanges might be an ideal vehicle for insurance plans that include an accountable care organization (ACO). Only a handful of ACO plans, however, are being marketed on either type of exchange.

David Muhlestein, senior director of research and development at Salt Lake City-based consulting firm Leavitt Partners, says the ACO model makes sense for the exchanges. The model, he explains, helps to reduce coverage costs by managing where enrollees receive care.

Aetna offers ACO products on both public and private exchanges. Its public-exchange ACO plans are sold in Arizona through an ACO relationship with Banner Health Network in Phoenix; in Houston through a relationship with Memorial Hermann, and in Virginia through a relationship with Carilion Clinic and Riverside Health System. In addition, Innovation Health, the health insurer jointly owned by Aetna and Inova Health System, offers its plans on Virginia’s federally run exchange.

Medica Health Plans offered three ACO-type products through Minnesota’s state-run exchange. Each is paired with a provider system, such as the Mayo Clinic. The insurer might work with providers in other parts of the state to expand its ACO portfolio on the exchange, but no decisions have been made. In 2012, Medica became the first carrier in Minnesota to make an ACO product available to the individual market. Such products have since proliferated in the state’s individual market.

“We see ACOs as one of the few remaining ways to control costs under health care reform, and offer a lower premium alternative to more traditional network products,” says Medica spokesperson Greg Bury. Partnering with key providers is “the best way to provide an integrated clinical/payer experience where we take the consumer out of the middle of the traditional complex relationship between providers and carriers,” he says. “ACOs allow a laser-focus on improving the end-to-end health care consumer experience.”

While early results are encouraging, he says the uptake, particularly on broker-sold business, has been somewhat less than expected. The market has grown accustomed to networks with almost every provider included across a state or region, and may be slow to change. However, as premiums increase, there could be more migration into the ACO plans, he adds.

One hurdle has been in convincing brokers and potential customers that the model is not a return to a 1980s-style HMO. While some ACO-based insurance products place severe limits on providers that can be seen outside the ACO, Medica’s products offer broad open access for primary and specialty care. The model doesn’t use a referral approach and doesn’t require enrollees to select a primary care clinic.

There is a belief within the ACO community that shared savings has short shelf life, Muhlestein tells AIS. “Shared savings is built on the premise of taking money out of the system, so eventually you are going to take all of the slack out and reach a new baseline,” he explains. Provider groups, which are being asked by carriers to take on increased risk, might decide to build their own ACO-based products and sell them on exchanges by either building or buying an insurance subsidiary or partnering with an existing carrier to process claims.

“The question is, once you’ve maxed out shared savings, what’s next?” he asks. The ACO model might not be any more effective at holding down coverage costs than a narrow-network plan. But unlike narrow-network plans, the goal of an ACO is to use payment models to improve the quality of care while reducing costs.

As we increase the number of distribution channels for health insurance, it’s going to make sense for ACOs and health plan products to take advantage of the improved distribution bandwidth, adds Dan Schuyler, a senior director at Leavitt Partners.

For coverage that began Jan. 1, Aetna offered ACOs to group retiree and other employer customers on its proprietary private exchange. The company also offers ACO products through other third-party private exchanges, says spokesperson Sherry Sanderford. In November 2014, Aetna acquired bswift, which provides a technology platform that offers a retail shopping experience for health insurance exchanges and employers nationwide. That acquisition is part of the company’s private exchange strategy.

Medica also operates its own private exchange where it offers five ACO-based products and a broader network within the ACO group. Employers that choose to offer coverage through the exchange give their workers a choice between the ACOs and the more expensive broader network option. To ensure adequate specialist representation, the broader option includes some specialists who are part of the ACO but not part of the major care system at its core. According to Bury, 93% of members enrolled in ACO networks re-enroll each year during open enrollment, indicating high satisfaction with the program, he says.

Excerpted from the 8/1/2015 issue of AIS’s Inside Health Insurance Exchanges

© 2015 by Atlantic Information Services, Inc.