ACO Cost Containment Strategies

Do a quick Google search and you’ll see there are dozens (if not hundreds) of different strategies ACOs can employ to attempt to reduce costs for their attributed patients. Many ACOs, especially ones new to the model, often struggle to identify the ones that will have the greatest impact. The most successful ACOs deploy a mix of strategies focused on both short- and long-term outcomes. Starting with quick and relatively inexpensive cost containment strategies is a great way for an ACO to create savings while minimizing up front costs. From there, investing in initiatives with longer, but often greater, returns is a great next step as ACOs continue to mature. Finally, there are some common pitfalls new ACOs should avoid, as they can waste resources and give a false sense of success. 

For most ACO populations, hospitalizations are usually the largest single source of spend. Reducing unnecessary hospitalizations (and rehospitalizations) can have a significant impact on shared savings. Hospital readmissions are almost always preventable and reducing them creates savings for the ACO as well as a much better experience for patients. Health Information Exchanges (HIEs) often provide real time notifications when an ACO’s patient has been hospitalized. ACOs can subscribe to these HIE services and when an alert is received for a patient, either reach out directly or alert the appropriate ACO participant practice that one of their patients has been in the hospital. Having the patient seen in the practice as soon as possible after discharge significantly reduces the likelihood that the patient will be readmitted. ACO practices can also receive higher FFS reimbursement for these follow up appointments by billing for Transitional Care Management. 

Another fairly quick initiative to deploy is a focus on medication adherence. Anywhere from 10% to 25% of hospitalizations are caused by medication nonadherence. Many patients do not volunteer to their PCP that they aren’t taking the medications they’ve been prescribed. If a provider knows a patient isn’t taking their meds, there are several options they can explore for improving adherence, e.g., prescribing a low-cost generic in the case of financial hardship, or finding a replacement med that doesn’t cause the same side effects. ACOs can help providers recognize these issues by leveraging the claims data provided by CMS. Examining the Part D claims files can allow an ACO to identify gaps in medication fills, and this information can be provided to ACO participants who are well-equipped to act on the information. 

As ACOs tackle the “low hanging fruit” (pardon the cliché), they can begin to focus on broader initiatives that require more up front investment but can create long term benefits. One of these strategies is to deploy centralized care management services. A small number of patients are usually responsible for a large percentage of ACO costs, and primary care practices are often not well equipped (or reimbursed) to provide care management to these patients. An ACO can create economies of scale by hiring a small team of care managers to engage patients across the entire ACO population. These care managers can work with these patients on an ongoing basis to coordinate care across multiple settings and create and manage care plans that put these patients on a path to a healthier (and less expensive) life. 

As ACOs, especially ones new to the program, work to identify patients for interventions, many look at historical costs as a major factor in determining risk. It’s an intuitive approach to focus efforts on the patients that were expensive last year, but experience shows us that the high cost patients last year are often not the high cost patients this year. Most patients who experience crisis events that lead to high costs in a particular year will see their utilization and cost fall the next year with no clinical intervention –  something statisticians call regression to mean. ACOs that focus care management activities on these patients are given a false sense of success as many of the engaged patients’ costs drop significantly from one year to the next. ACOs that focus on these patients will look back at the end of the year and realize that they missed most of the high cost patients because they’d just been “looking in the rearview mirror”. ACOs should make use of technology to identify patients who are likely to be high cost in the upcoming year. Doing this will allow them to focus efforts where they can actually make an impact. These strategies are just a small sample of all that’s available to ACOs as they look to reduce costs. ACOs should analyze their population and determine the best mix of initiatives to give them the best opportunity of generating savings. No matter what initiatives an ACO decides to take on, prioritization is key – Excelling in 2-3 focused initiatives is far better than failing in 10.

Download our ACO Cost Containment Data Sheet, or visit the Acclivity ACO page for more information and helpful resources.

Author:

John Dickey | COO, Acclivity Health Solutions