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Employers Want Greater Transparency Into Health Plan ACO Arrangements


Catalyst for Payment Reform is leading a movement for employers and other healthcare purchasers to push for greater transparency into their health plans’ ACO arrangements.

Employers and other healthcare purchasers face a conundrum. Accountable care organizations (ACOs) are growing in prevalence—up to almost 1000 this year—and increasingly provide their employees and dependents with care. Theoretically, the ACO model should improve patient care and make it more affordable. In reality, employers know little about what’s happening under the ACO hood or how well ACOs are performing.

This must change. If employers and other purchasers are to stay the course with ACOs, they need complete and unbiased information—how are ACOs designed and what is their impact? If the current trend continues, some employers may not be convinced and could opt out of the ACO movement. Failures will eventually be evident to purchasers if healthcare costs continue to grow unabated or quality doesn’t improve meaningfully. However, it would be far better to have current information about the performance of ACOs to inform employers about whether they are worth the investment and to enhance the likelihood that they succeed—along the way tweaks may be needed.

Therefore, employers are calling for greater transparency into their health plans’ ACO arrangements. This is why Catalyst for Payment Reform (CPR) is leading a movement for employers and other healthcare purchasers to push for greater transparency into their health plans’ ACO arrangements. What is it employers want to know?

You have surely heard the quip “you’ve seen 1 ACO, you’ve seen 1 ACO.” It’s no joke. In meetings that CPR hosts regularly with health plans and their employer customers, we have seen wide variation in how plans define ACOs, select providers for ACO arrangements, and measure performance. In addition, the reports employers receive from their health plans on ACO performance feel random and cherry picked—highlighting successes but silent on areas of performance that have stayed the same or gotten worse. Despite the variation out there—some of it reasonable adaptation to unique market dynamics—when employers hear the term ACO, here’s what many expect:

Minimum cost and quality thresholds

Surprisingly, many health plans do not have specific cost or quality thresholds that providers must meet before they can enter into a contract with the health plan as an ACO. In fact, some health plans contract with subpar providers in hopes that an ACO arrangement will incite them to strengthen their cost and quality performance.

However, given that health plans often ask their self-insured customers to foot the bill for the care coordination fees that health plans pay to ACOs, it is easy to understand why employers want assurances that contracted ACOs come prepared to ensure better coordination, continuity, and delivery of care. Employers, ideally, want contracted providers to demonstrate they can meet cost and/or quality thresholds before health plans attribute their members to these programs.

Shared risk payment methods

Many employers want ACOs to be held accountable for meeting financial targets. This would require ACOs to transition from upside only payment arrangements to risk-sharing arrangements that likely better motivate ACOs to cut waste. As seen with Medicare’s ACO programs, shared-savings incentives—which do not hold providers accountable for overspending—may not be potent enough to ensure that providers reduce unnecessary care. Both shared-savings and shared-risk arrangements typically operate on top of fee-for-service, which continue to entice volume. Downside risk attempts to mitigate such incentives.

Reporting on ACO performance specific to their population, as well as across the health plan’s book of business

Employers often receive reports from their health plans that fail to inform them about how an ACO is impacting their population—and sometimes, conversely, employers even receive reports about ACOs from which none of their population members receive care. For employers to determine whether these organizations are improving care and managing costs, they need reliable and meaningful employer-specific performance information. Health plans should be able to provide such information to any employer with more than 500 covered lives attributed to an ACO.

If an employer’s attributed population is too small for a health plan to provide performance data specific to its population, plans can still provide the employer with ACO performance across the health plan’s entire book of business to show the employer how these arrangements are faring generally. If such information is displayed in a standard way from plan to plan, employers could gauge which plans’ ACO strategies are succeeding.

Performance on meaningful cost, quality, and utilization measures

Employers are interested in measures of cost, quality, and utilization that help them easily assess whether care is advancing in the right direction.

Cost measures should show how much the employer has paid to support the health plan’s ACOs and how much the employer is spending on the members of its population in ACOs compared to the same members during the prior period and its population members not in ACOs. In addition, an employer would want to know how the health plan has shared any savings or losses with them.

Quality measures should illustrate how the ACO is providing needed care, eliminating waste, and creating a positive experience for patients. Measures of overuse, such as cervical cancer over-screening and potentially avoidable emergency room visits, indicate whether an ACO is weeding out waste. Measures such as comprehensive diabetes care and childhood immunization status indicate whether an ACO is providing essential services to patients. Patient experience of care measures—of great interest to employers—are strikingly absent from many health plan ACO measure sets.

Utilization measures help employers compare the use of certain services by members of the population that receive care from ACOs to those who do not. Do attributed members have more primary care visits? How do all-cause hospital readmissions compare between the two groups? In addition, how often do members of the population attributed to the ACO receive care from providers outside of the ACO? The more “leakage” there is, the less the ACO’s special approach can make a difference.


Surprisingly few health plans meet these criteria in designing and reporting on their ACO arrangements. As the number of ACOs continues to grow, health plans should take note of what employers want when it comes to reporting—full transparency! Up-to-date, comprehensive and meaningful information about ACO performance will enable employers to work in partnership with their health plans to enhance the likelihood that ACOs succeed.

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