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In Washington, Aetna’s Kennedy Offers One Vision of an Accountable Care Future

October 12, 2014
by Mark Hagland
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Charles Kennedy, M.D., CEO of Aetna Accountable Care Solutions, offers his vision of private insurer-sponsored accountable care

Charles Kennedy, M.D., CEO of the Accountable Care Solutions division of the Hartford, Conn.-based Aetna, on Oct. 8, delivered a keynote presentation entitled “Building a Sustainable ACO: Strategies for Success,” as part of the Health IT Summit in Washington, D.C., and held at the Westin Arlington Gateway, in the Washington suburb of Arlington, Va. Laying out his vision of the future of accountable care, Dr. Kennedy spoke of collaborations with specific integrated delivery systems in specific markets as being at the core of Aetna’s overall strategy around the development of accountable care organizations (ACOs) nationwide.

“We try to forge collaborations,” Kennedy emphasized in his keynote address. “And the idea is that the payer has a certain set of expertise, and the payer has a certain set of expertise. And if we can come together, we should be able to reduce the risk associated with the transition from volume to value, for providers. But that is no small task: if you think of a health plan’s role, how does the provider see us? Denied claims, pre-authorization hassles, denials for not using prescribed processes… but moving towards value, the incentives become aligned. If you give folks the right incentives, they’ll cost less,” he emphasized. Kennedy conceded that inevitably, efficiency improvements will lead to “creating slack in your delivery system; there are going to be fewer days per 1,000, and shorter lengths of stay.”

Charles Kennedy, M.D.

The key, Kennedy said, will be that when Aetna partners with a provider organization, it will help that provider organization to deploy data analytics and population health strategies and solutions that will help to close the revenue gap created by efficiency improvement, and it will work intensively with that provider to help provider leaders merge clinical and claims data in order to improve clinical and financial outcomes. “The real differentiator of what we do versus what a lot of technology vendors do,” he said, “is that we’re driving a specific value of the overlying price. When our actuaries do the analysis and say if we were able to deliver a product, the cost would be $350 PMPM [per member per month]. But if you were able to implement an HIE [health information exchange] [and get your physicians to use it, especially in the ED, and you participated with us in studies of avoidable ED visits, for instance, and collaborated with us in disease management programs, we could help bring the per member per month costs down considerably and make disease management programs effective.” Given all those supports, he said, “A health plan can go from $350 PMPM to $310 PMPM, and that $40 PMPM can help offset losses from reduced utilization” incurred by the provider.

As the Aetna Accountable Care Solutions website notes, all of this is part of an overall corporate strategy. Indeed, the “Our Purpose” section of the organization’s website says the following: “Healthcare is ready for a major transformation. At Accountable Care Solutions from Aetna, we are reinventing healthcare by collaborating with providers to radically improve population health, financial sustainability and consumer engagement. We believe that with payers, providers and patients on the same team, significant, positive change is possible. We work to empower your provider organization to realize your unique vision of improving clinical outcomes, moving toward value-based care and gaining market share,” the statement of purpose adds, before listing a range of facilitative collaboration possible between Aetna Accountable Care Solutions and provider organizations.

In particular, Kennedy cited the collaboration with the Falls Church, Va.-based, five-hospital Inova Health System as a key example of Aetna’s success in collaborating with integrated delivery systems nationwide. “Here in the DC area, Inova is the dominant delivery system in the area, with north of 60 percent market share, and Aetna and Inova developed a shared savings program,” he noted.

“We launched Innovation Health Plan, built from the ground up. It has products sold on the public and private exchanges. And they’re price-leading products. It was successful in that, within the first year of operations, we grew up 140,000—that’s outstanding growth. And virus the Blues plan, we sold one to one in this geography, and were profitable in our first year of operations. Why was it successful? A lot of it began with the commitment from both organizations to collaboration and to data-sharing; but also, we created shared financial incentives.”


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I just read the article that Dr. Kennedy espoused the "positive partnerships" w/ ACO's. Ironically, as a privately owned physician practice, we have requested fee schedule increases over the past 3 years. NEVER ONCE has our request been approved! In fact, sadly, when I start to "go up the ladder" in provider networks, the more hostile the representatives become. We're ALWAYS given a letter that states they've "reviewed our request" but are unable to provide an increase at this time. But, please, feel free to request an increase again next year.

I've performed a reimbursement analysis and we are CURRENTLY RECEIVING LESS THAN 80% of Medicare's fee schedule! When I've addressed this with the provider representative, her comment back to me was "Well if you're referring to the current Medicare Fee Schedule you're correct". However she contends that it's NOT the case if I were to refer to the 2010 Medicare Fee Schedule!! We've been an "in-network" provider with Aetna since 2007 and NOT ONCE HAVE WE EVER BEEN GRANTED AN INCREASE WHEN REQUESTED!!

As we are located across the street from the Gulf of Mexico, and located on a barrier reef, our overhead expenses are far more than a practice located on the "mainland". I'm ALWAYS being told that Aetna's rates in Pinellas County are within the normal reimbursement range. This isn't even REMOTELY CORRECT!!!

What's also frustrating is that not only do we treat the "local population", but due to our location, we even treat Aetna's "out of state" insureds!! And, more recently, we've had an upswing in the "local population" due to the number of physician practices within Pinellas County because of the VOLUME OF PHYSICIANS TERMINATING THEIR CONTRACTS WITH AETNA DUE TO SUCH "POOR REIMBURSEMENT"!!! Further, are ANYBODY'S overhead EXPENSES at the same rate that they were in 2010??!! I'd be hard pressed to believe that anyone in the field of medicine can state that!! Just ask how much it costs to BEGIN the initiation of EMR's in a practice. Not to mention if you have a "new" physician in your practice and the amount of money outstanding in just their student loans!!

So, although Dr. Kennedy may "sing the praises" of Aetna's CAPITATION contracts (PMPM), many other physicians in our county seem to strongly disagree as "actions speak louder than words"!!!