Let’s face it: transitioning from volume- to value-based care is hard. Successful ACOs often hire teams of dedicated care coordinators, analysts, and administrators. A 2017 ACO Survey found that the average ACO spent $1.1 million on care management and an additional $60,000 in operating health information technology, analytics, and reporting. Even with such investments, Medicare ACOs, by and large, have thus far failed to find the Holy Grail of value-based care: simultaneous improvement in quality and reduction in cost. In particular, the latter goal has proven elusive.

The journey to value-based care may not be easy, but with the right information at the right hands and time, and with a healthy dose of commitment and ingenuity, we can all embark on it with confidence and hope. Many methods for reducing the total cost of care for a population are well known. For example, the use of generic medications, and appropriate immunizations are widely accepted as such methods. In fact, the first challenge a provider organization may face when embarking on this journey is how to focus scarce resources on those methods that would produce the highest impact.

To help our ACO clients with this challenge, we have often used the metaphor of an apple tree as illustrated above. Each apple on the tree represents a category of potential population health cost savings. Based on historical claims data we can estimate the size of each apple, i.e. the amount of potential savings in the corresponding category. These relative sizes will, of course, be different for different organizations and populations. As on a real apple tree, some apples are hanging low, while others sit at the top of the tree. The former represent relative low-hanging savings opportunities, while the latter typically require higher investments in resources, including technology and staff.

In the above illustration, we have identified 15 common categories of savings opportunities. Hence there are 15 apples on the tree. Keep in mind that this is by no means an exhaustive list. For example, our illustration above was designed for Medicare Shared Savings Program (MSSP) ACOs that are not measured by CMS on their medication cost. Therefore, it does not include any medication savings category. While the concept is applicable to other care delivery organizations, the number, and type of apples may be different.

You may have also noted that the above apple tree bears three distinct fruit colors: red, green, and gold. Each color represents a different type of opportunity:

 = Direct Savings Opportunity.

 = Opportunity to increase revenue under fee-for-service (FFS).

 = Opportunities to create a high-performing network.

In our work with ACOs over the past seven years, we have come to realize that not every step you take along the journey leads immediately to cost savings. Metaphorically speaking, you must sometimes eat a green apple to get the energy you need in order to get to higher-hanging red and golden apples. In a payment system that is still mostly volume-based (fee-for-service, or FFS for short,) it is incumbent upon us to leverage any opportunity to increase revenue under FFS that can potentially lead us closer to the Holy Grail.

The idea of offering FFS opportunities as a means to fund the journey to value-based care was not lost on CMS policymakers. For example, the new billing codes introduced in 2015 and enhanced in 2017 for chronic care management (CCM) is a way CMS offers all providers to fund the necessary investments in care coordination to improve care for chronic disease patients. Similarly, Medicare’s comprehensive primary care plus (CPC+) program, started in 2017 and expanded in 2018, provides primary care practices with funding for care management activities. As it is available nationwide, the former is represented by one of the green apples on our tree.

The savings opportunities in the illustration above are based on real data from one of our (Next Generation) Medicare ACO clients. In the sections below, we expand on each of the categories. Contact us if you are interested in seeing your own savings opportunities tree!

Preventive medicine includes many different types of services that are reimbursable under FFS, such as immunizations and screenings. Even more importantly, most health plans, both public and private, offer providers incentives for providing these services to their members. For example, HEDIS-based pay-for-performance programs include incentives for such services as:

  • Breast Cancer Screening (Mammography)
  • Colorectal Cancer Screening (Colonoscopy)
  • Cervical Cancer Screening
  • Chlamydia Screening in Women
  • Lead Screening in Children
  • Weight (BMI) Assessment and Counseling
  • Childhood and Adolescent Immunizations
  • Flu Vaccinations
  • Pneumococcal Vaccinations

For organizations that deliver the actual service, such as mammography and colonoscopy in-house or “in network”, this represents a double revenue opportunity – one for delivering the service and another under pay-for-performance incentives. Organizations that refer patients out for the services may still benefit from the latter.

One particular type of preventive medicine is wellness visits. Long established in the care of children and adolescents, Medicare in recent years has been promoting the annual wellness visit (AWV) for older adults. Beyond the FFS reimbursement, AWVs provide an excellent opportunity to ensure patients remain attributed to the ACO and make sure they have no gaps in care.

Referred to as “frequent flyers” or “super users,” every population has its share of people for whom the Emergency Department (ED) has become the primary place of care. Unfortunately, the ED is not designed to address the needs of such patients. Emergency medical services are expensive and lack the “whole person approach” most needed by the “super users.” A busy PCP who has only a few minutes to spend with each patient also cannot be expected, nor is she equipped, to address the needs of this population. But provider networks can identify, or create the necessary community resources. For our ACO clients, this is often one of the first steps shown to lead to better care and lower cost.

The concept of managing “high-risk” patients sounds sensible; after all, these are the patients consuming the most resources. But, as every care provider knows, the reality is much more complex. often the highest-cost patients, such as those with ESRD or cancer, will continue to need expensive services no matter what we do. Though predictive risk models are generally more effective in prioritizing care management resources than retrospective risk scores, the predictive models often fail to distinguish between those patients whose cost/quality we can impact and those we simply cannot (read more under “High-Impactability Patients”).

Despite the above complexity, any sensible cost reduction initiative must acknowledge the special needs of high-risk patients and allocate special resources accordingly. Many of our ACO clients have found that focusing most of your resources on the patients that fall in the second and third quadrants of predicted risk, is more effective than focusing on the top quadrant. Also, factoring input from patients, families, the care team, and social determinants of Health (SDoH) is useful is assessing risk.

In 2015, Medicare began paying for chronic care management (CCM) services. These services are typically provided by phone outside of face-to-face patient visits. In 2017, Medicare increased the incentives and eased the requirements to encourage more care providers to offer these services. If you are a PCP who’s still not offering CCM services, we highly encourage you to read more on our CCM page.

While Medicare reimbursement for CCM services clearly increases the cost of primary care services, early reports published by CMS show that the investment in CCM services leads to cost reduction in a relatively short period. For care providers, these reports provide an indication that the program is likely to continue. To date, CCM reimbursement is the largest potential public funding source for providers interested in developing care management capabilities in general.

Transitional Care Management (TCM) comprises a set of services reimbursable under Medicare FFS. Providing these services affords you the opportunity to guide your patients through some of the most critical and confusing moments of their interaction with the healthcare system, such as the discharge from a hospital after an acute episode. TCM services have been shown to reduce readmissions thereby leading to better quality and reduced cost.

Similar to chronic care management (CCM), some required TCM activities are performed outside a face-to-face patient visit. Billing Medicare for a TCM episode, however, originally required at least one face-to-face visit. Starting in 2014, Medicare has allowed the use of telehealth as an alternative for a face-to-face visit in certain cases.

A recent study has shown that the risk of subsequent long-term care (LTC) placement varies substantially among SNFs. In fact, this risk appears to be substantially more dependent on the SNF than the prior hospital the patient stayed in. Above and beyond the cost/quality variance among SNFs (which account for about 15% of Medicare Part A costs,) these findings suggest that selecting high-quality SNFs is critical to overall cost reduction.

Inpatient hospitals account for more than 36% of Medicare spending – the largest single category. Over time, our ACO clients develop methods to reduce unnecessary hospitalizations altogether. Physician-led ACOs (i.e. ACOs that do not include hospitals) also leverage data to help patients choose higher-performing hospitals in their community. Hospital-based ACOs may still prefer to keep patients within their network, but sooner or later they realize that they must improve their performance (on a service line basis) or risk losing patients to their competitors.

The concept of “high-impactability” is an attempt to improve the effectiveness of care management resources. Instead of focusing on all “high-risk” patients, let’s try to identify those who are most likely to benefit from care management intervention.

Often overlooked by ACOs, “Choosing Wisely” comprises a set of evidence-supported, harm-free, cost-and-quality conscious guidelines that promote shared decision-making between patients and providers. For example, Annual EKGs and Back Pain Imaging are two of the guidelines where you will typically see the most savings (due to over utilization) when looking at Choosing Wisely reports. Clinigence helps ACOs identify which guidelines offer them the biggest savings opportunities and which providers are not adhering to those guidelines.

PCPs are the backbone of your ACO, but inevitably they do not all practice the same way. By any measure of quality or cost, you’ll find variations. Leveraging these variations in an orchestrated fashion is arguably one of the most powerful drivers of value improvement. Clinigence provides you with PCP scorecards based on Quality, Cost and Utilization metrics. We recommend sharing these scorecards with your providers on a regular basis to educate them and decrease PCP variance.

Given Medicare’s readmission penalties, this may not be a significant cost reduction opportunity for ACOs. However, since Medicare ACOs are measured on their readmission rate as part of their quality performance, Medicare ACOs can leverage this report to help hospitals reduce their readmissions and assist in their efforts to build out high-performance networks.

Reducing Avoidable ED Visits offers ACOs a significant direct savings opportunity. Based on the NYU algorithm, Clinigence shows you what ED visits were avoidable. You will get a 1-click view of the potential savings in the opportunity, with quick drill down to both PCP and individual patient levels.

Patient Leakage can mean something different, depending on what type of ACO that you are. For Hospital-Based, it usually means the loss of services offered by the hospital or Its integrated delivery network. For Physician-Led ACOs, it may imply the loss of specialty services if available from ACO providers, or the loss of preliminarily attributed patients.

However, for ACOs with downside risk, Leakage Reports can be leveraged in the implementation of a much more sophisticated strategy: To Develop a “Narrow Network” of Preferred Providers Based on Their Quality and Cost Effectiveness.

The term “Narrow Networks” has gained traction in recent years. As ACOs take on more risk, a similar story emerges as a useful model of cost reduction. Clinigence provides ACOs with the KPIs necessary to develop a High Performance Network of “Preferred Providers”, as well as the Leakage Reports needed to help keep patients within the network of “Preferred Providers”.

For every $1 spent on primary care, Medicare spends roughly $5 on specialty care. Making sure your patients see high-performing specialists starts with transparency into the quality and cost of specialty providers. Clinigence gives you the insight into KPIs for every specialty and specialty provider, such as Total Paid, Average Paid Per Patient and Average Patient Risk. Specialists where the Average Paid Per Patient is high and the Average Risk is low is a great starting point for this opportunity.