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  #11  
Old 09-13-2018, 11:04 AM
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George Frankly George Frankly is offline
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I have seen this vary widely over my career. The craziest one was another department using a simple interest calculation for a multi-year study. I was a greenhorn way back then and did not speak up.
I hope it wasn't an actuary that put the study together. Yikes.
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  #12  
Old 09-14-2018, 10:47 AM
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I hope it wasn't an actuary that put the study together. Yikes.
It wasn't. The actuarial department was supposed to support the results though. You can guess how that went over.
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Old 09-14-2018, 03:17 PM
kooky cookie kooky cookie is offline
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Regarding the first point, I'm not sure how the programs you're looking at are structured. If the payers are making payments to the providers, in the form of a PMPM payment or some other form of cash, then those should absolutely be deducted from any savings paid out. If the providers are making investments without the payer chipping in, then you wouldn't deduct those. I'd consider those as practices investing with the hope of getting shared savings.

Agree with your second point.

The last point is a tough one. You're right, a lot of these programs are trying to encourage physicians to keep pts out of the hospital. But that means less revenue to the hospital. The only way you can make that work is to share revenue with the hospitals through the ACO-type programs. Conceptually, let's say you avoid a $20k admit, thereby saving the payer $20k. And let's say on that $20k bill, the hospital would have made a $5k profit. If the payer then paid $8k to the hospital as shared savings, then the hospital is up $3k, and the payer saves $12k net. Now, in practice, teasing that all out is impossible. No perfect way to do it, the question is whether or not you can come up with a reasonable way.

I hope that makes sense. Need more
Thanks for discussing!

My first point is that you can't really say the program saved $X if it cost the ACO a bunch of money to participate in the program (IT costs, organizational costs, etc). I think it's more accurate to say the program saved $(X - a bunch of money). Even better, subtract off the costs that CMS incurs if you want to know if ACO programs actually save the system much.

My last point was just that in general, primary care and hospital goals and incentives are in conflict. I don't see how you can have good results in which patients are getting good care and spending is going down if you have primary care and hospitals in the same entity. Primary care should be working to make and keep patients healthy, which means less downstream care is needed because you're getting problems solved earlier or preventing problems with high quality and high access primary care. Hospitals do not benefit from this but I believe this is the best way to benefit patients and taxpayers.
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Old 09-14-2018, 04:05 PM
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Thanks for discussing!

My first point is that you can't really say the program saved $X if it cost the ACO a bunch of money to participate in the program (IT costs, organizational costs, etc). I think it's more accurate to say the program saved $(X - a bunch of money). Even better, subtract off the costs that CMS incurs if you want to know if ACO programs actually save the system much.

My last point was just that in general, primary care and hospital goals and incentives are in conflict. I don't see how you can have good results in which patients are getting good care and spending is going down if you have primary care and hospitals in the same entity. Primary care should be working to make and keep patients healthy, which means less downstream care is needed because you're getting problems solved earlier or preventing problems with high quality and high access primary care. Hospitals do not benefit from this but I believe this is the best way to benefit patients and taxpayers.
For the former, you have to define 'savings.' From which perspective? Payers don't care how much physicians or facilities spend, if claims cost goes down then they win. In the larger perspective of whether or not ACO type programs save money, you should consider what the cost that the payers bear... but I don't think that's cut and dry, because if some of these initiatives work, they could pay dividends for years, so you have to potentially amortize them out beyond the duration of the program. I don't think we're disagreeing all that significantly here though.

The issue of competing incentives is a problem. There are some solutions, but again, cutting costs means cutting someone's revenue. Agree it's strange to pair up PCPs and hospitals. I'm living this right now with the Oncology Care Model, which measures total cost of care for cancer pts receiving chemotherapy. So there's an incentive to reduce any/all costs, including those for radiation therapy. Only problem is most of my practices own radiation equipment. It's tricky but we're working around most of the problems in some fashion, I can't get too specific here!
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Old 09-14-2018, 04:34 PM
WhosOnFirst WhosOnFirst is offline
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Thanks for discussing!

My first point is that you can't really say the program saved $X if it cost the ACO a bunch of money to participate in the program (IT costs, organizational costs, etc). I think it's more accurate to say the program saved $(X - a bunch of money). Even better, subtract off the costs that CMS incurs if you want to know if ACO programs actually save the system much.

My last point was just that in general, primary care and hospital goals and incentives are in conflict. I don't see how you can have good results in which patients are getting good care and spending is going down if you have primary care and hospitals in the same entity. Primary care should be working to make and keep patients healthy, which means less downstream care is needed because you're getting problems solved earlier or preventing problems with high quality and high access primary care. Hospitals do not benefit from this but I believe this is the best way to benefit patients and taxpayers.
Regarding a conflict between primary care and hospital utilization. I've performed several studies on wellness initiatives and PCP utilization. Every study I've done has shown an increase in the PMPM cost for members who participate in the programs, in year 2 versus year 1. This really shouldn't be surprising as the more frequently you see a PCP, the more likely you are to be diagnosed with something.

The most interesting study I performed was on pregnant women and tracked their prenatal care. Those with a high level of prenatal care had higher average costs, higher average inpatient days, and high rates of c-sections. Investigation suggested a higher number of co-morbid conditions diagnosed in the prenatal care group. Since this was a Medicaid population, it seemed likely that there was a certain amount of pent up need for health services that went previously untreated. In other words, the higher costs in the program group was due to costs outside of maternity.

This is all a long way of saying that the hospital system isn't necessarily in conflict with PCP treatment versus hospital care. The system, as a whole, comes out ahead with more PCP care. At least in the short term. I never performed any sort of long term (say looking at costs 3+ years out) study.
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