Thursday, April 14, 2011

Okay, But What Do The Actuaries Have To Say About Accountable Care Organizations?

The elites, politicians, economists, physicians and bloggers may have much to say about Accountable Care Organizations (ACOs), but let's face it: we ignore what the actuaries have to say at enormous peril.  That's why it's worth checking out this important report from the brainiacs over at Milliman.  The report helpfully focuses on the many insurance and business risks of ACO's.   Its insights will help you help your bosses, co-workers and teammates as your company grapples with getting that ACO proposal ready for the looming January 1 kick-off date.

For example, think "revenue cycle management" or "fee negotiations" will be enough?  Think again, because CMS is not talking any prisoners on the risk of downside loss. You'll need far more discipline and capital, because Milliman points out that the Feds not only intend to withhold 25% of any savings, but will also require ACOs demonstrate an ability to pay back any losses. 

Milliman predicts that ACOs will need ongoing "service line" performance reports. That's vital, because they'll need to be prepared to redirect their care resources at numerous potential threats, like high readmission rates, high usage of skilled nursing facilities, increased numbers of one-day hospital stays or elevated specialist referrals.  In addition to following those data, it's also important for ACOs to know what level of reduction in any given metric - such as "ambulatory sensitive," "preference sensitive,"  short stay and repeat admissions - is achievable and what that means to the ACO's and CMS' bottom lines.  For example, is a "10%" reduction in ambulatory senstive conditions vs. an adjusted benchmark within reach, and does it get you over the "minimum savings ratio"?  If so, by how much?

Speaking of which, the Milliman report also has some useful benchmark information on ambulatory care sensitive condition (ASC) admission rates.  The report has some great information that compares the ASC performance numbers of "well-managed" to "loosely managed" insurance plans.

Which indirectly inspired the DMCB to once again to rekindling it's telepathic spiritual bonding with the Great and All Powerful and All Knowing Carnac the Magnificent - someone who was so wise, he was able to divinate answers to questions before he knew the question

While the DMCB was writing this post, it mysteriously entered into a trance-like state in which Carnac psychokinetically blessed the DMBC with three insightful and all-powerful answers:

1. Answer:  The Great Plains, Milliman and Wardrobe Malfunction!

2. Answer: A hero and a zero!

3. Answer:  Medicare Advantage and The Republican Deficit Reduction Plan!

It was only AFTER these answers were bestowed that the questions were transmitted to the DMCB from the spiritual realm of the all-knowing Carnac:

1. Question: Name a prairie, an actuary and a mammary.

2. Question: Who is Acting CMS Administrator Don Berwick and what are his chances of Senate confirmation?

3. Question: Give an example of capitation and decapitation.

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