Data / Empowering High Performance

The healthcare industry has heard and seen a plethora of articles and seminars on how to go about the care redesign process regarding accountable care organizations (ACOs). What seems to be missing in these resources are any mention of the administrative elements - those boring things that, if gotten wrong, will preclude an ACO from assured success, whether that be economically or qualitatively. At the highest level, there has been a dearth of discussion on the corporate risk structures and the administrative, financial and other management elements needed for an ACO to truly be successful.

Let's not get into ethereal change management discussions, but rather stay with the concrete details - those that are separate from the clinical uses of data. There are key administrative tasks that arise from this expanded data flow and "accountability." For example, there are several basic reconciliations, such as assigned patients against paid claims. What happens with those patients whose activities trigger assignment only in the last few months of the year, but whose contracts are for a full year? How does an organization measure revenue, risk and the quality numerators and denominators?

Everyone is presumably familiar with IBNR (Incurred But Not Reported). What about the equivalent for patient assignment, or "Future Retroactively Assigned Patient Transactions?" One could certainly have fun playing with that acronym.

In the commercial world, where everything is negotiable, what level of risk/financial participation is appropriate for catastrophic events - in-area versus out-of-area, in-network versus out-of-network, or regarding such things as subcapitation, bulk payments, national contracts ... The list goes on. And all of these flex on size and sophistication of the organization.

Regarding Medicare ACOs, most commercial carriers brag about a 98-percent accuracy of their claims payment systems. CMS, in its 2011 performance budget, indicates that the error rate for CMS Fiscal Intermediaries is as high as 12.4 percent. Establishing a second, independent adjudication process at 98-percent accuracy could save roughly 10 percent. Even if CMS is fully successful, then an ACO could count on a savings approaching 6 percent just from the second adjudication. As these files are completely electronic by the time they get to an ACO, the cost of this adjudication should be minimal - perhaps 1 percent?

Lastly and extremely importantly, current reinsurance models simply do not fit the risk and financing structures of ACOs and savings/gain-sharing programs. Depending on the size and sophistication of the effort, this ranks right up there as a top five make or break decision.

Mike Barrett is CEO of Ascendent Care, a consulting firm that specializes in recognizing how existing, emerging and proven technololy, processes and knowledge can be adapted, adopted and deployed in various healthcare markets and settings.



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