Florida Blue, Baptist Health and Physicians Group to Set Up Accountable Care Organization in Miami

By John Dorschner, The Miami Herald

Florida Blue, Baptist Health South Florida and a group of Miami-Dade cancer doctors are forming an organization they say will lower healthcare costs and spark a transformation of the way medical care is delivered in the region.

The three healthcare interests — the state’s largest health insurer, Miami-Dade’s most prosperous hospital system and Advanced Medical Specialties, an oncology group of 38 doctors practicing at 17 locations — announced Thursday they are creating an accountable care organization.

ACOs are a new concept to cut healthcare costs by coordinating care and reducing unnecessary tests and services, with any savings shared by the organization members.

Learn more about ACOs at HCAF’s Lunch & Learn Webinar The Next Stage of Healthcare: Embracing the ACO Model on Tuesday, May 22! Click here for more details.

“We’re looking forward to dramatically changing the way care gets delivered,” said Pat Geraghty, chief executive of Florida Blue, the new name for Blue Cross Blue Shield of Florida.

Geraghty said the ACO being set up in Miami-Dade is a forerunner for the rest of the state. “We have many other conversations going on around the state.”

Ralph Lawson, chief financial officer of Baptist Health, said healthcare costs are “a national problem” that won’t be solved by the federal government. “We need to make this work or [healthcare’s] just going to bankrupt the country.”

ACOs are a key part of the Obama healthcare reform act, intended over time to change the present fee-for-service structure, in which the more a provider does, the more he gets paid. ACOs receive bundled payments to treat an entire illness, and the providers work together to provide the most efficient treatment, which means avoiding the test duplication that often happens in a fee-for-service system.

One specific problem ACOs are expected to solve: Many patients released from hospitals often are re-admitted quickly because they receive no follow-up care after being sent home. If ACOs work correctly, patients will benefit because “it’s going to produce better outcomes, … reduce hassle and lower costs,” said Blue’s Geraghty.

A smattering of ACOs are now being set up in other areas. Almost all consist of teams of providers, such as hospitals, doctors and home healthcare agencies. What makes the Miami-Dade ACO highly unusual is that providers are joining with an insurer — in an industry where providers are often at war with insurers about proper payment levels.

Baptist’s Lawson said that to really coordinate care “providers and insurance all need to be in the same room.” More efficient care means savings for insurers, and in an ACO, a percentage of those savings are shared with the providers. That means reduced initial payments to providers.

Leonard Kalman, the oncologist who is chairman of Advanced Medical Specialties, said his group joined the effort because it realizes that first Medicare, then many insurers, will be forcing providers into organizations receiving bundled payments, and Advanced Medical wants to be ahead of the curve.

Kalman said called the ACO “a journey we’re going on.” He said he expects it to be “quite a formidable task…. Everybody is hoping they don’t lose too much before they ultimately learn how to do it well.”

Geraghty said Florida Blue will be willing to renegotiate terms if the ACO doesn’t work for the providers.

Baptist’s Lawson said his hospital group realizes the present system is unsustainable. “We see where the industry is going. …. This is the first step of innovation …. Of course, if we’re successful, we’ll get a competitive advantage and probably get a lot more business.”

Lawson said Baptist is open to working with other insurers and providers to set up other ACOs.

The Supreme Court is now deciding the constitutionality of the Affordable Care Act, but Geraghty said that whatever the court decides, healthcare delivery must be reformed so that payments are focused on quality and efficiency, “not focused on a system that the more you do, the more you get paid.”

The present ACO will be available first to cancer patients in Florida Blue’s commercial plans. Afterward, it may be extended to those in Medicare Advantage plans. Ultimately, if the setup proves successful, Geraghty said, savings could be passed along to patients by reducing premiums.

The idea for the ACO started some months ago with discussions between Advanced Medical Specialties and Florida Blue. Geraghty said he then saw a column in the Miami Herald by Baptist Chief Executive Brian Keeley urging dramatic changes in the healthcare system.

“We had a lot of the same philosophies of quality driving costs,” Geraghty said. Later, he gave a speech at the Greater Miami Chamber of Commerce and chatted with several Baptist executives there. Many of the Advanced Medical offices are connected with Baptist hospitals, so the three entities decided to team up.

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