Critical Issues in Performance Evaluation for Medicaid ACOs
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1 Critical Issues in Performance Evaluation for Medicaid ACOs Derek DeLia, Ph.D. Associate Research Professor Center for State Health Policy Seventh National Medicaid Congress Arlington, VA Wednesday May 30, 2012
2 Acknowledgement This research was supported by the Agency for Healthcare Research & Quality (Grant no. R24-HS019678) Center for State Health Policy 2
3 Discussion paper Medicaid ACO Demonstration Project in NJ Technical assistance from Rutgers Center for State Health Policy (CSHP) Discussion paper Proposed Approach for Calculating Savings in the NJ Medicaid ACO Demonstration Project Comments to Center for State Health Policy 3
4 Medicaid ACOs Major goals 1. Reduce cost growth 2. Improve healthcare quality/patient experiences 3. Improve access to specific services How do we know goals are met? 1. Rigorous academic evaluation 2. Predetermined performance measures & rules Themes 1. Don t let the perfect be the enemy of the good 2. Don t let Theme #1 be the enemy of the good Tolerance for imperfection low standards Center for State Health Policy 4
5 Key principles of ACO performance evaluation 1. Accuracy 2. Fairness 3. Simplicity 4. Transparency 5. Timely administration Technical decisions Analytic tradeoffs Center for State Health Policy 5
6 Medicare Shared Savings Program (MSSP) Proposed rules public comment final rules Medicare ACO Responsible for defined group of Medicare patients Rewards for reducing Medicare spending (i.e., keep a share of savings generated) Must meet quality standards Useful template for Medicaid ACOs Many details require modification Center for State Health Policy 6
7 Measured savings in MSSP Per capita baseline for ACO patients Weighted average of 3 most recent years Trended forward for national rate medical inflation (Medicare FFS) Updated by projected Medicare FFS spending growth nationally ACO savings rate (ASR) ASR = (Baseline - Performance year)/(baseline) All spending $ risk adjusted using Hierarchical Condition Categories (Currently used in Medicare Advantage) Separate trending & updating by eligibility category Medicare ACOs must report & meet quality standards 33 measures If not, shared savings payments to ACO adjusted downward Center for State Health Policy 7
8 The problem of normal variation ACO spending could or due to random factors MSSP protects Medicare from false savings ( ) ACOs not protected from false spending increases ( ) Establish minimum savings rate (MSR) for savings to count MSR Center for State Health Policy ACO Savings
9 Risk bearing in the MSSP One-sided model ACO keeps part of savings generated 50% depending on quality & other standards No risk of financial loss for spending increases Two-sided model ACO keeps part of savings generated 60% depending on quality & other standards Penalties for spending increases: (100-savings%) ACOs opting for one-sided model must switch to two-sided model after 1 st contracting period (3 years) Center for State Health Policy 9
10 Adapting the Medicare Approach for Medicaid ACOs Center for State Health Policy 10
11 Technical issues for Medicaid ACO evaluation - 1 Data requirements Medicaid FFS claims (Similar to MSSP) Data from managed care organizations MSSP excludes managed care Won t work for Medicaid Encounter data (capitation payments) Trending & updating ACO baseline spending State-level Medicaid trends & projections (Similar to MSSP) Potential eligibility strata: duals; aged, blind, disabled; etc. Center for State Health Policy 11
12 Technical issues for Medicaid ACO evaluation - 2 Risk adjustment Chronic Illness & Disability Payment System (CDPS) common in Medicaid MCOs Not applicable to all patients Modified adjusters needed Expansion population in 2014 No baseline Medicaid history Need to create one from existing data (current enrollees, hospital charity care, etc.) Enrollment churning Calculations on monthly rather than annual basis Center for State Health Policy 12
13 Policy/technical issues for Medicaid ACOs Risk bearing & MSR threshold May discourage participation Overpayments may be reinvested into care improvements Cost outliers MSSP 99 th percentile What about super-users? Interaction w/mcos Part of care management ==> shared savings Free-rider problems ==> adjustment of plan rates Medicaid-specific quality measures Different patients (pregnancy outcomes, behavioral health) Quality improvement vs. quality maintenance Center for State Health Policy 13 Link to distribution of shared savings (all/nothing vs. sliding scale)
14 QUESTIONS? Questions later: Center for State Health Policy 14
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