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Self-Funded Group Health Shared Savings Arrangements Intro Available

Doctor Stethoscope
March 09, 2016

Self-funded group health benefit plan sponsors and those considering sponsoring such a plan can find an "Introduction to Shared Savings Arrangements and ACOs" in a recent Milliman Benefits Perspectives: Current Issues in Employee Benefits newsletter.

In a shared savings arrangement, the sponsors of the group health plan and the provider delivery system are both "… financially vested in achieving the same goals …," explain Milliman actuaries Anders Larson and Paul Houchens, authors of the article. Mr. Larson and Mr. Houchens, however, indicate in the article that "… such arrangements also introduce a host of new analytical and contractual challenges for human resource and finance professionals." 

Among the advantages for healthcare providers to join or start an accountable care organization (ACO), according to the September 2015 article, are diversification of their revenue streams, an increase in their market share, and the ability to better focus on population health management.   

The authors detail some of the key factors to consider in determining whether a shared savings arrangement will add value for plan sponsors, as follows.

  • Number of plan participants

  • Geographic dispersions of the group employers and employees

  • Current healthcare utilization and cost

  • The accountable care organization's track record

The article also provides some excellent tips on fundamentals that should be negotiated with an ACO and managing the ACO relationship.

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