February 2011, Vol 2

Message From An Actuary
Tim Luedtke, FSA, CFA

This edition of The Actuarial View discusses the Brookings Institute presentation on accountable care organizations and the stated objective for such organizations by the Centers for Medicare & Medicaid. Accountable Care Organizations are described within the Patient Protection and Affordable Care Act and offer opportunities to participate in Medicare's Shared Savings Program.

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Tim Luedtke, FSA, MAAA, CFA
Principal & Consulting Actuary

Diane Luedtke, FSA
Principal & Consulting Actuary

Accountable Care Organizations . . .
Seeking Coordinated Care

Tim Luedtke, FSA, CFA

Today, I shared in the Brookings Institute's program "Achieving Better Care at Lower Costs through Accountable Care Organizations". An interesting program with a high-caliber panel of presenters including Mark McClellan (former FDA head), Donald Berwick (Centers for Medicare & Medicaid), John Bertko (actuary), Ed Cymerys (actuary), Elliott Fisher (Dartmouth Institute for Health) to name but a few.

The 'Triple Aim'

A key focus of the conference outlined how accountable care organizations (ACOs) sought to achieve the 'Triple Aim' that would:

    1. Improve the health of the population
    2. Enhance the patient experience and care
    3. Reduce, or at least, control cost

The objective of ACOs is to redefine and achieve these aims without simply becoming a repackaging or renaming of today's status quo system of health care.

Don Berwick's ACO Goals

Through a personal story, Dr. Berwick laid out the vision for a health care system that plans ahead, works as a team, and puts the patient (or their advocate) in charge by:

Putting the Patient and their Family at the Center - engage people in the decisions about their therapeutic options and allowing them to choose what works best for them

Creating a Health Care System that has a Memory - through technology and improved approaches to administering care make sure that those that need information have it, so that patients and their caregivers do not continually have to repeat their stories

Create a System Where Hand-offs Matter - too often the mistakes that occur, happen when care changes from one caregiver to another; eliminate these errors and the associated waste

Respect Resources - resources are valuable and the effort is not around withholding care, but rather about eliminating waste

Reinvest Where Investment Counts - today's health care system makes investments to increase volume and throughput, tomorrow's investments are envisioned to be focused on patient value and outcomes

An aspect of this vision is for a reimbursement system which rewards those who provide value through acceptable risk sharing mechanisms. The reimbursement system will seek to avoid opportunities for cherry-picking risks, so that beneficiaries are protected and choice is maintained. The system must recognize that only 10% of the variation in health status is due to health care, the rest is due to genetics or environmental factors (behavioral choices, risks in society, etc.). You can hear the presentations here. The audio versions are the most complete and if you'd like to hear Dr. Berwick's personal story it begins at approximately the twenty minute mark of the first audio track.

John Bertko, former Chief Actuary for Humana and currently a Guest Scholar at Brookings, discussed risk adjustment. He outlined how actuarial adjustment will be a good mechanism for adjusting payments for and within an ACO. Mr. Bertko's presentation is here at about the 15:40 mark. Should your organizations or clients become interested in ACOs, please give us a call.

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