UnitedHealthcare initiative aims to improve quality and reduce costs

A new initiative between Minnetonka, Minn.-based insurer UnitedHealthcare and a collaboration of major Wisconsin health systems will work on efforts to improve processes that are expected to result in improved quality of care and reduced costs of health care plans for businesses and their employees.

Quality Health Solutions Inc. is a collaborative of major Wisconsin health systems – including Agnesian Healthcare, Columbia St. Mary’s, Froedtert Health, Wheaton Franciscan Healthcare – and the Medical College of Wisconsin. These health systems have convened to form what’s called an “accountable care organization” (ACO).

ACOs are a way for health providers to form networks with the goal of better coordinated care, and Kaiser Health News recently called ACOs “one of the most talked about new ideas in Obamacare.”

QHS is Wisconsin’s largest ACO and is one of the first multiple-system ACOs in the entire country.

“This is a $7 billion proposition in terms of the net revenues of the members,” said Peter Pruessing, CEO of QHS. “Collectively, we’re a very large organization with a lot of capabilities.”

And though Brookfield-based QHS has been operational since 2005 and incorporates a wide range of activity, some of the major steps it has taken have come at a unique time of upheaval within the industry, as insurance provided through the Affordable Care Act’s newly established marketplaces will be in full effect on Jan. 1, 2014.

In mid-September, Wisconsin’s second largest health system – Ministry Health Care – joined QHS, significantly increasing the organization’s footprint across the state, which now covers the majority of eastern Wisconsin.


The organization also recently announced a major new initiative with UnitedHealthcare, one that will represent $650 million of UnitedHealthcare’s annual reimbursements.

“It’s a very innovative collective effort of otherwise competing health systems to work together through clinical integration to deliver these results to the payer,” Pruessing said. “Clinical integration is the way that otherwise competing entities like our members – Wheaton, Columbia St. Mary’s, Froedtert, Agnesian, etc. – working in the same market would otherwise be competing.”

This new accountable care initiative incorporates the 3,000 physicians and 18 hospitals comprising the five QHS members in southeastern Wisconsin. It will begin with more than 50,000 Wisconsin residents currently enrolled in UnitedHealthcare’s employer-sponsored health plans and is expected to grow.

“We’re kicking this off with 53,000 patients, but United is saying this will go to 100,000 very quickly,” said Pruessing.

Pruessing said this agreement was in the works for more than seven months, and that the final agreement, “contains 19 specific measures that we had to agree on – clinical measures, efficiency measures and financial measures.”

For those insuring through UnitedHealthcare this means, “the costs of their health plan in the participating business will be managed down over time,” said Pruessing. “An employer, who will be benefitting from this over time, should be able to pass some of those savings along. (People in this agreement) will gain in terms of the costs of those premiums. They’ll gain in terms of the quality of care they are getting because now they’re going to be functioning in this clinically integrated environment where we have all these metrics.”

Cathy Jacobson, CEO and president of Froedtert Health, a founding member of QHS, called this a “pioneering strategy.”

“As UnitedHealthcare’s partner in this market, QHS care providers will use a shared clinical information platform and common quality standards to coordinate care for UnitedHealthcare’s plan participants,” she said. “It is a tremendous step toward a sustainable health care system.”

Pruessing said this initiative is representative of a larger change in the relationship between the health system administering the care and the insurance company that is paying for it. Historically, he said, providers and payers were at odds in the negotiating process, where “each side was just trying to get the most it could from the other side,” but that “the era we’re moving into now puts us on the same side of the table.”

Pruessing indicated that a number of other discussions with additional insurance payers are currently ongoing, but he declined to name any of them specifically.

The agreement between QHS and UnitedHealthcare is a three-year contract that begins on Jan. 1, 2014. There are “threshold requirements or gateways” that each health system is required to meet to become eligible for cost savings, said Pruessing, and in order to do so, all of these strict requirements must be met by QHS and its participating health systems.

As Jacobson notes, “These are not easy targets we’ve established for UnitedHealthcare.”

Another of these participating health systems is Wheaton Franciscan Healthcare, which joined QHS in February, 2012. Coreen Dicus-Johnson, senior vice president of physician and revenue operations for Wheaton, said this makes their health system mutually aligned with United.

“The incentives are aligned in terms of the care that’s provided and how we’re paid for that care,” she said. “We’re both incented to bend the cost curve to support doing that. That’s the big game-changer.”

Jacobson also said this initiative creates more of a mutually beneficial system than it has been in the past.

“We have an opportunity to work together to accelerate that savings and to bring some of those resources back into the health system,” she said. “It becomes more of a two-way aligned incentive to accelerate our quality improvement efforts.”

Columbia St. Mary’s CEO Mark Taylor also commented on the positives of this initiative when it was announced.

“This is a tremendous step forward for QHS members to cooperatively improve population health, positively impact patient experience and effectively reduce medical costs,” he said. “Although we compete with many of these systems on a daily basis, cooperation in an accountable care organization will help us achieve something larger, something that none of us could achieve on our own.”

The enthusiasm for QHS among these health systems extends beyond the new initiative with UnitedHealthcare. The larger ACO arrangement with these competing health systems is particularly unique.

“This puts us ahead of the curve,” said Jacobson. “(QHS) always has been and continues to be one of our strategic priorities.”

ACOs are being established across the country, but many of them – such as Aurora Health Care’s ACO here in Wisconsin – are within one large health system. And though QHS’s ACO will share some fundamental similarities with Aurora’s, said Pruessing, the biggest difference is the way in which multiple health systems participate.

“One thing we like about this approach is that this preserves the flavor of the different members in the different markets,” said Pruessing. “Our members are leaders in their markets. Each of them is sort of in a market and not necessarily connected to other markets…We’re a competitive option in the market, but within our membership, we’re kind of a broad narrow network. We have the ability to steer business and keep it within our network, but within our network, we have a lot of choices. In a way, it’s maybe the best of both worlds.”

Wheaton, for example, could have established its own ACO, said Dicus-Johnson, but the health system chose instead to join QHS.

“We have a number of hospitals, employed physicians, physician partners, similar to some of the competitors in this marketplace,” she said. “Why we all came together is we believe strongly that the collection of us is stronger.”

Pruessing said that a key part of having this multi-system ACO is that this large network has been established without any mergers or acquisitions taking place. However, he said, the possibility that these large health systems could merge is a realistic possibility.

“(Mergers) could happen,” he said. “If some of our members, through working together, decided they wanted to have closer relations – whether that’s structural or functional – that would be fine with us. Over time, some of them may decide that they want to come together in a more integrated way.”

For QHS at this stage, though, the focus is to bring up the bottom line in terms of “performance, functionality and value,” said Pruessing.

The acceleration in activity that QHS has seen as of late is in some part due to the Affordable Care Act, said Pruessing. However, there are other market forces at work, and the wheels have been turning for a while, he said.

“We’ve known for a long time, and the field has known for a long time that these changes were coming,” he said. “It’s been accelerated by reform. But I would distinguish between the Affordable Care Act itself, on the one hand, and these irresistible forces that were already at work that were going to play out regardless of the politics. I’m not so fixated on the political manifestation of this; we’ve all kind of been moving, to some degree, in this direction over the last several years. If you’ve noticed, costs have actually come down even without reform being in place. There are people out there saying how bad this has been, and it hasn’t even been implemented yet. There’s a lot of lack of understanding. There’s been a lot of noise and limited signal.”

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