Universal American to Drop Certain MSSP ACOs; Leading Consultant Opines As to Why in June Issue of AIS Newsletter

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In the June issue of Atlantic Information Services’s ACO Business News, a leading consultant speculates that perhaps more than just poor financial results could be contributing to Universal American’s decision to drop certain ACOs.

Health insurer Universal American Corp., which has partnered with 34 Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) in the last three years to offer financial and analytical support in exchange for a share of future savings, said last month it will cut loose an undisclosed number of those ACOs due to poor financial performance. For its June issue, a leading consultant interviewed by Atlantic Information Services, Inc.’s ACO Business News (ABN) posits other reasons for Universal American’s decision to drop certain ACOs.

Leavitt Partners L.L.P. Director of Research David Muhlestein tells ABN that “some of the organizations who didn’t want to follow the Universal American game plan may get cut — there could have been some personal disagreements there.” Universal American’s approach has leaned heavily on impacting the cost of care in the short term by cutting certain care-related expenses, rather than on investing in care management systems and strategies that could cost more up front, but pay dividends down the road, Muhlestein explains.

However, some of the problems with individual ACOs’ performance could be related more to the benchmarks assigned to them by CMS, which are based on prior year spending for their specific ACO members, than to differences in care coordination philosophy, he adds. Those that were assigned easy-to-hit benchmarks have an advantage over those with more difficult benchmarks, and Universal American may be culling those that can’t meet the benchmarks, Muhlestein says.

Asked to respond to Muhlestein’s comments, Universal American Chairman and CEO Richard Barasch tells ABN that they “are pure speculation on [Muhlestein’s] part and contain several inaccuracies about our ACO strategy and Medicare Advantage business.”

Universal American President and Chief Financial Officer Robert Waegelein tells ABN that the company will detail which ACOs are affected when it reports second-quarter financial results around the beginning of August. The company is waiting for final 2013 results from CMS to make its own final determinations on which ACOs stay and which will go.

“We want to be very clear: We’re still very much a firm believer in MSSP,” Waegelein says. However, he adds, “we want to invest in what’s working and cease investment in what’s not.”

Visit http://aishealth.com/archive/nabn0614-01 to read the article in its entirety.

About ACO Business News
ACO Business News delivers timely news and business strategies on accountable care organizations for physicians and provider groups, hospitals, health plans and their advisers. The monthly newsletter covers the latest industry actions to design and create ACOs, results that are already being achieved by ACO-like entities, and HHS regulations and guidance on this provocative new trend in health care. Featuring the pros and cons of various strategies for different types of organizations, ACO Business News is designed to help readers avoid the pitfalls ahead and transform exciting ACO opportunities into winning business strategies. Visit http://aishealth.com/marketplace/aco-business-news for more information.

About Atlantic Information Services
Atlantic Information Services, Inc. (AIS) is a publishing and information company that has been serving the health care industry for more than 25 years. It develops highly targeted news, data and strategic information for managers in hospitals, health plans, medical group practices, pharmaceutical companies and other health care organizations. AIS products include print and electronic newsletters, websites, looseleafs, books, strategic reports, databases, webinars and conferences. Learn more at http://AISHealth.com.

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Jill Brown, Executive Editor
Atlantic Information Services
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