By: Sandeep Wadhwa
The talk about Accountable Care is turning into action with the announcement of the Pioneer ACO awardees from CMS. In addition, the Medicare Shared Savings Program solicitation has been released with initial responses now being accepted. As delivery systems and providers consider whether they want to respond, I’d like to suggest some key areas to consider.
- Quantify the potentially preventable events for the population under consideration. Preventable events represent cost and quality opportunities in the delivery system. Reducing preventable events can result in real savings and improved patient care. There are five major categories of potentially preventable events: admissions, readmissions, complications, emergency room visits, and ancillary services. If your system has low preventable event rates, there may be limited opportunity for additional savings. Furthermore, matching up the areas of opportunities with your ability to institute change in those areas will help assess the probability of success. If cardiovascular related complications and readmissions are the dominant source of high rates of preventable events and the clinical leadership and program is in disarray; better to know that upfront.
- Rigorously risk adjust. The allocation of new resources and services should, in part, be driven by the risk profile of the population. Setting additional medical home/care management fees, for example, for primary care should be a function of the risk profile of the primary care provider’s panel. In addition, the rates of preventable events differ by the chronic disease burden and severity of illness of the population served. Understanding the mix of healthy, moderately ill, and very ill patients is another dimension in assessing the opportunity for savings and will help focus where interventions should be channeled.
- Think through savings attribution up front. If emergency room visits decline who receives the credit? Primary care or the hospital? How does the responsible entity attribute savings among multiple provider types? We’d suggest that the comparison of actual and risk-adjusted expected rates of potentially preventable events can be used to quantify savings and allocate those savings among individual providers. Any method of sharing savings must balance rewarding historical good performance with rewarding subsequent improved performance.
Done correctly, potentially preventable events and risk adjustment can be an integral part of an effective shared savings program.