Accountable care organizations (ACOs) need to properly deploy medical management in pursuit of certain utilization and cost targets. This dynamic is explained as part of a recent briefing paper on the nuts and bolts of ACOs. Here is an excerpt:
ACO’s should focus initial medical management efforts on reducing leakage to hospitals and specialists that are not part of the ACO. This will increase volume to ACO providers and help offset revenue loss due to improved utilization management. Inpatient utilization management is another target for initial medical management efforts particularly since inpatient costs make up approximately 30% of total costs for a commercially insured population and 37% of total Medicare Part A and B spend. Successful ACOs will focus medical management efforts both on avoiding potentially unnecessary admissions and on reducing inpatient hospital leakage (admissions to hospitals not associated with the ACO). Potential reductions in admission vary significantly by admission type, so identifying real opportunities requires analyzing historical data to identify impactable and non-impactable admissions. In particular, ambulatory care sensitive admissions, preference sensitive admissions, and readmissions are considered as impactable (see Definitions). Claims data logic available from the Agency for Healthcare Research and Quality and published reports can help identify benchmark rates for these impactable admissions—and a sense of how many can actually be eliminated.
See the full paper for more detail and for citations.
Here are some key concepts for anyone who wants to understand accountable care organizations (ACOs):
Ambulatory care sensitive admissions (ACSA) are those for which good outpatient care can potentially prevent the need for hospitalization, or for which early intervention can prevent complications or more severe disease. ACSAs are considered a measure of the quality of ambulatory care delivery in preventing medical complications. High rates of ACSAs might indicate inadequate access to high-quality ambulatory care, including preventive and disease management (DM) services. DM programs focus on individuals with chronic conditions to aggressively monitor and educate patients in self-management of these chronic conditions. ACSAs that involve complications of diabetes, chronic obstructive pulmonary disease (COPD), congestive heart failure (CHF), coronary artery disease (CAD), asthma, and hypertension are admissions that are directly impacted by effective DM/primary care coordination efforts. Based on a Milliman analysis of Medicare claims data, 14% of total admissions are considered ambulatory care sensitive admissions.
Potentially preventable hospital readmissions are an important indicator of quality care and cause unnecessary expense. Preventable readmissions can occur because of inadequate discharge planning, inadequate post-discharge follow-up, or lack of coordination between inpatient and outpatient healthcare teams. Transition of care programs, case management, and disease management services aim to coordinate care at discharge and after; with effective care coordination and oversight, preventable readmissions should be reduced. The rate of preventable readmissions within 30 days has been reported at 11% from a study of all hospital admissions in Florida. The rate of all readmissions reported from a recent Medicare analysis is 19% with the majority reported to be preventable.
Preference sensitive admissions are admissions for elective surgical procedures where the evidence does not suggest greater efficacy between surgical management and medical management for treating particular conditions in some patients. Examples include spinal fusion, joint replacement, hysterectomy, bariatric surgery, cardiac catheterization, percutaneous transluminal coronary angioplasty (PTCA), coronary artery bypass graft (CABG), benign prostate surgery, and others. There is significant variation in the rate of these procedures by region suggesting that local medical opinion and practices have a strong influence on the choices of treatment. There has been a recent focus on the need for patients to be better informed about the treatment options along with consideration for a patient’s personal values and preferences when making medical treatment decisions. This recent trend in patient decision support has been reported to reduce the rate of these procedures. A Milliman analysis identified that, for a commercial population, approximately 16% of non-maternity admits are preference sensitive admissions.
Leakage is defined by services delivered by non-ACO providers that could be delivered by providers associated with the ACO.
For more information, see the recent healthcare reform briefing paper.
The Patient Protection and Affordable Care Act (PPACA) calls for the creation of accountable care organizations (ACOs) as a more cost-effective way of paying for healthcare. In order to succeed, ACOs will have to establish actuarial cost and utilization targets and use medical management to achieve those targets. This process of benchmarking and managing toward targets requires a delicate balance of actuarial and clinical know-how.
A new briefing paper offers a practical guide for approaching this analytic and management imperative. In addition to identifying the steps required, it identifies the medical management priorities for an effective ACO and highlights some of the risks involved.
We have blogged before about managing upstream cost drivers. A new article in Insight by actuaries Jeff Chanin and Rob Park and by Dr. David Mirkin looks at controlling costs for employer-sponsored healthcare. Here is an excerpt:
In a recent study we analyzed a company’s active employee healthcare benefit experience to identify program areas that were performing well and those that were performing poorly. We compared its program experience with benchmarks that reflect the company’s demographic profile, geographic profile, and benefit designs, using benchmarks for “loosely managed” and “well-managed” plans. Loosely managed benchmarks represented plans that have some utilization review, preauthorization, and case management that were ineffective at reducing utilization. We expected any moderately managed healthcare benefit program to produce results significantly better than these benchmarks.
Well-managed benchmarks represented nationwide claim cost and utilization targets in a highly effective managed care environment (such as a staff model HMO or a globally capitated provider group without fee-for-service incentives) that effectively applies utilization management principles across the entire continuum of medical care. This includes inpatient care, outpatient facility care, ancillary testing, routine office care, referral physician care, and prescription drugs. In the current healthcare benefit system, it may not be realistic for a given group healthcare benefit insurer or administrator to produce results equal to, or better than, the well-managed benchmarks. However, the most efficient managed care organizations produce results similar to these benchmarks. In this study, we assumed provider reimbursement levels were identical for loosely and well-managed benchmarks to focus on utilization.