Today’s providers (hospitals and physicians, that is) are leery about what happened in the mid-1990s, when they readily accepted risk without really knowing what it meant to be accountable for a population—in other words, what it meant to assume and manage population risk. Although they didn’t need to assume all payer functions (e.g., product development, rating, underwriting, claims adjudication, member services), they needed to be knowledgeable and actively participate with the payer in some of these functions (e.g., underwriting) for their own protection and proactively assume other functions (e.g., care, case, disease and transitional care management and the foundational actuarial analyses, clinical informatics, and financial analytics) to even have a chance at success.
Fast-forward 15 years: We’ve learned from our mistakes and grown in our understanding of the problem. We are much better situated to make risk-sharing work between plan sponsors/payers and providers. There’s better technology, better information, better connectivity—and with 15 years of inflation, there’s an even bigger burning platform: The cost of health care is far too onerous. We have to do something now.
In an accountable care environment (such as that of an accountable care organization), providers need to work with their plan sponsor/payer partners to acquire exposure-based administrative claims data. This data will help them begin the analyses to understand the population for which they are accountable—who they are, where they live, their morbidity profiles, how and where they consume medical resources, who needs intervention now, etc. This is a first step to delivering high-quality, efficient health care to their constituent populations, while bending the cost curve and ultimately (we hope) reducing the price of health insurance.
But in most cases, providers do not have the information or the ability to perform such analyses—not to mention that the compensation models haven’t been historically aligned for it to make sense for them to do so. Although payers possess both the information and the ability, they are far removed from the point of care and thus the maximum effectiveness of such information; the two parties are still not contractually aligned. And in the 1990s version of downstream risk models there was just no incentive for them to provide such services to providers who in most cases were left holding all the risk.
Actuaries are one source to bridge this gap between the plan sponsor/payer and providers. Actuaries can identify and capture the necessary information and turn it into actionable opportunities for providers through analytics.
Calculating Opportunity
Actuaries evaluate opportunity for health care delivery systems across the country to help providers begin to understand both their risks and opportunities. Specifically, actuaries work to:
- Identify, collect and manipulate data
- Use these data to identify how patients and providers consume medical resources (e.g., they may identify patients who access the health care system in the wrong way or providers who overuse diagnostic services)
- Synthesize data into actionable information that affords broad care management, population health and financial performance management
These steps set the stage for the plan sponsor/payer and provider partnership to achieve the triple aim: 1) better care for individuals, 2) better health for populations and 3) lower growth in health care expenditures. These parties must work together effectively, stop being adversaries and successfully engage the consumer/patient for there to be any hope of achieving a much-needed transformation.
Putting the Data Into Action
Once they “know” the population for which they are accountable and where performance opportunities lie, “connected” providers must execute around the fundamentals of care delivery, utilize actionable information at the point of care and put clinical programs in place to begin to realize this potential. Putting a definitive road map in place to get from point A to B, along with placing necessary tools in the provider’s quiver and wrapping them with the necessary clinical and operational infrastructure, will be vital to facilitating the necessary change. Plan sponsors/payers must help in the latter regards and in providing data. In some cases, this may require provider behavioral changes.
Providers will have to look at ways to bend the cost curve—shifting in-office check-ups to nurse practitioners or physicians’ assistants, focusing on frequent outreach to chronic patients, reducing excesses in procedures and diagnostics, making use of other clinically equivalent or better and more efficient modalities of care, and so on. At the same time, providers will also have to consider ways to replace lost revenue (e.g., the elimination of lower-intensity admissions driven by better access to appropriate ambulatory care). A clinically integrated delivery system with aligned incentives and plan sponsor/payer-driven enabling product designs can not only repatriate any current ”leaked” utilization, but also increase volume through membership growth driven by reported quality outcomes and lower market price points.
By quantifying opportunity over a number of years and explaining how achievement of optimal performance will have to happen over time, actuaries can help providers “get their heads around” the journey—how it will not only improve care, but also yield financial benefit. Overlaying any contractual terms providers may enter into with plan sponsors/payers, such as gain share or two-sided total cost of care contracts, must be done for full appreciation of the opportunity. With this knowledge in tow, providers can begin the trip to deliver high-quality, cost-effective care and quarterback their partners through the creation of connected, intelligent and aligned health care communities.
This article was featured in the Winter 2011 issue of Ignite magazine. To find additional content from this issue, click the links below: