Truchil A, Dravid N, Singer S, Martinez Z, Kuruna T, Waulters S
Abstract
Accountable Care Organizations (ACOs) aim to reduce healthcare costs while improving patient outcomes. Camden Coalition of Healthcare Providers’ (Camden Coalition) work already aligned with this aim before receiving state approval to operate a certified Medicaid ACO in New Jersey. Upon its formation, the Camden Coalition ACO partnered with UnitedHealthcare and, through state legislation, Rutgers Center for State Health Policy (CSHP) was established as its external evaluator. In evaluating the Camden Coalition ACO, Rutgers CSHP built on the Medicare Shared Savings model, but modified it based on the understanding that the Medicaid population differs from the Medicare population. Annual savings rate (ASR) was used to measure shared savings, and was calculated at the Medicaid product level and aggregated up to reflect a single ASR for the first performance year. The calculated performance yielded a range of shared savings from an ASR of 0.4% to 5.3%, depending on which dollar amount was used to create the outlier ceiling (limit at which a subset of members with expensive utilization patterns are excluded) and how the appropriate statewide trend factor (the expected %age increase in Medicaid costs across the state) was chosen. In all scenarios, the ASR resulted in less cost savings than predicted. The unfavorable results may be caused by the fact that the evaluation was not calibrated to capture areas where Camden Coalition’s ACO was likely to make its impact. Future ACO evaluations should be designed to better correlate with the patient populations and practice areas of the ACO.
Insights Results
Overview of article/models
This article addresses the lessons that the Camden Coalition, Rutgers Center for State Health Policy (CSHP), and UnitedHealthcare learned while evaluating the Camden Coalition’s ACO performance in year 1. Specifically, it discusses the effects of including all MCO spending in the evaluation, and the results of examining the patients who accrued the highest costs over performance in year 1
The New Jersey Medicaid ACO model was inspired by the Camden Coalition of Healthcare Provider’s efforts to engage high-utilizer patients. The ACO model established a geographic-based approach in which all Medicaid recipients living in a defined catchment area would be assigned to the ACO
The Camden Coalition’s ACO has long-standing relationships with MCOs. The ACO established 2 MCO contracts before state certification: 1) UnitedHealthcare New Jersey in December 2013, and 2) Horizon Blue Cross Blue Shield of New Jersey in January 2014. As part of its array of strategies for accomplishing the ACO’s goals of improving the quality of health care delivery and bending the cost curve, the Camden Coalition operates: 1) Regional Health Information Exchange that collects real-time data from the 4 large health systems in the region; 2) A multidisciplinary, community-based care management program that engages approximately 250 individuals per year who have high numbers of hospital admissions and significant medical and social complexity; and 3) Clinical redesign programs that provide structured capacity building and enhanced reimbursement to the majority of primary care practices in the city
The New Jersey ACO legislation established Rutgers CSHP as both a technical assistance provider during the ACO implementation phase as well as the external evaluator of the demonstration project. Rutgers CSHP’s role included analyzing and reporting on Medicaid data to help guide ACO strategies, as well as developing and refining a new evaluation methodology to identify whether quality improved and shared savings was produced in each ACO community
Methods of models and evaluation
Rutgers CSHP’s evaluation approach, first articulated in their 2012 report, built on the evaluation foundation developed through the Medicare Shared Savings Program’s (MSSP) methodology, which included a 3-year baseline period, risk adjustment using the IPRO risk score, and a trending factor that would be drawn from statewide growth rate per capita
2 particular components of the evaluation required significant reconsideration upon embarking on the evaluation: the decision to not create an outlier ceiling and the methodology for selecting the trend factor, the expected percentage increase in Medicaid costs across the state
The methodology for evaluating shared savings is based on calculating the ASR for each Medicaid product line during the performance year and multiplying it by expected spending. Savings are calculated by product line on a per member per month (PMPM) basis to account for different membership rates across the baseline and performance period
Results
Found that amongst 3716 patients, 0.9% of patients accounted for more than 32% of spending; 47% of United costs were driven by outpatient services
Rutgers CSHP’s evaluation of performance year 1 yielded a range of shared savings estimates. The shared savings estimates ranged from an annual savings rate (ASR) of 0.4% to 5.3% depending on 2 key decision points: dollar amount to create outlier ceiling, and how to choose the appropriate statewide trend factor
Nearly half (47%) of United’s total spending was driven by outpatient services. Included in outpatient services is emergency department (ED) spending, which is billed as an outpatient service, but ED spending represented only about 10% of total spending
The top 1% of members based on cost tended to fall into 2 distinct groups: pediatric members receiving expensive outpatient-based (predominantly homebased) services, and older members whose high costs were being driven by expensive pharmacy and/or outpatient services
The biggest cost driver was increasing pharmacy costs
Key takeaways/implications
Selecting a trend factor—the number that allows ACOs to estimate growth that is outside of their control—will continue to be a challenge. More work must be done to arrive at a fair and objective trend factor
Lessons for future shared savings agreement evaluations include: 1) Evaluations should be calibrated to capture where the ACO likely will make its impact; and 2) Evaluations should be approached with a realistic expectation of timing (e.g., may not receive immediate cost savings)
An area for future research is understanding additional subgroups of high-cost members
Focusing solely on shared savings will limit opportunities to explore other creative ways to collaborate and realign incentives—and it will be critical to properly evaluate those efforts
