Health system offers guaranteed savings as part of ACO

In a deal with employers and other customers, Milwaukee-based Aurora Health Care promises a slowdown in the growth of their customers’ health care costs.

By — Posted Aug. 15, 2012

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A Wisconsin health system has taken the unusual step of pledging savings for businesses that use its accountable care organization. Aurora Health Care, a 15-hospital system in eastern Wisconsin, announced in July that it will begin selling its accountable care plan in partnership with Hartford, Conn.-based Aetna.

Aurora said it will guarantee a slower growth rate in health care costs for its ACO customers compared with what employers have seen in previous years. In exchange, the businesses’ employees will get their care from the Aurora system.

“We believe this model sets a new standard for health care delivery and improved efficiencies,” Rick Klein, executive vice president of growth and marketing development at Aurora, said in a statement. “I wouldn’t be surprised if others emulate our model.”

The plans are meant for small and midsize businesses, which are less likely to be self-insured, and will take effect Jan. 1, 2013.

Smaller businesses that are “fully insured” pay a premium to Aetna or another health plan in exchange for Aetna managing benefits and carrying the risk for any expensive medical claims.

Aurora already works with large, self-insured employers, which do not pay premiums but pay bills directly and typically use a health plan only for administrative purposes.

Customers must submit three years of claims data so Aurora can estimate an expected savings, which could reach 10% annually, Klein said.

Part of the reason Aurora is confident it can deliver savings is its experience with its 48,000 employees. Aurora has seen a 6.2% annual increase in health care costs between 2001 and 2010, compared with a national average of 10.7%. Aurora’s health care costs rose just 1.2% between 2008 and 2010, while the national average was 9%.

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