Washington, D.C. — Healthcare reform is changing the managed care model and creating new alliances between providers and insurers, according to a panel of managed care executives at the concurrent session “Will Managed Care Someday Own You,” at this year's HCap Conference in December in Washington D.C.

At the crux of the discussion among panelists was the failure of the current healthcare model, and the ushering in of the accountable care concept.

“The fee-for-service model has to die. It doesn't align incentives. It's a bill-early-and-often model,” said Karey Witty, EVP and CFO of HealthSpring. “The incentive is to see patients and churn them quickly.”

Alternatively, HealthSpring, which represents a new generation of managed care organizations, has begun to emphasize a patient-centric, preventative care model in which the primary care physician is the focus of attention, and the managed care organization tries to exclusively align itself with its providers. It's what the panelists called a “closed loop” system.

“A lot of models beat up the providers for better costs. But my gut is to align the incentives so the care of the patient is in everyone's best interest,” Witty said. “We don't own our physicians, per se. We align ourselves with physicians, and in some cases we have physicians who only get paid by one payer. So we look for providers to accept a model where they go to one payer, for which we give incentives and better rates.”

Within this closed loop model, ‘aligning incentives’ starts with aligning companies. For physicians and hospitals, this may entail hitching one's wagon to a single network or payor.

“Health insurers are looking to vertically integrate on the physician side. Similarly, you are seeing hospitals spending a lot of money to acquire physician practices, and I think that those hospitals can create a defensible delivery system . . . backed by a limited insurance license,” said Wayne Lowell, President of Jonchra Associates. “I think you will see, within local communities, delivery systems that become effectively insurance companies.”

Contrary to one widely held belief that the traditional managed care concept may be waning, Witty and Lowell both foresee a world in which the advent of accountable care increases the need for managed care, particularly when it comes to information management, readmissions and risk.

“If you don't have the data that allows you to control the accountability, you can't effectively run the ACO,” said Lowell. “Going forward, there also will be much more diligence in managing the post-dispatch so that patients understand how to self care and prevent readmissions. This is where the managed care organizations can partner with the providers in this new paradigm to help manage the process.”