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Recent Message from the ACO of Washington: Reducing the Total Cost of Care

Published July 7, 2014

Using Claim-Based Metrics to Meet Our Goals

There's no one-size-fits-all strategy to reduce the total cost of care. As an organization, we need to look at a range of claim-based performance metrics to ensure we meet our cost reduction goals. The ACO will analyze key metrics in several performance areas and provide updates to our clinicians to ensure we're all doing our part to reduce the total cost of care.

Reducing Inpatient Admits

We all know that the single largest component of healthcare spend occurs in the inpatient setting. By analyzing inpatient admit data, we can identify cases for improvement in quality and cost control. Along with standard measures such as inpatient admits and bed days per 1,000, we'll look at:

  • Ambulatory Care Sensitive Admissions - This measure is used to assess the hospitalization rates for conditions where appropriate ambulatory-care prevents or reduces the need for admission to the hospital. Ambulatory-care-sensitive admissions, or ACSAs, can be used to measure the effectiveness of utilization and care management programs. High rates of ACSAs may indicate inadequate access to high-quality ambulatory-care, including preventive and disease-management services*.
  • Preference Care Sensitive Admissions - There are situations in which patients' preferences and those of their surgeons are essentially the same with little variation in the rates of surgical repair (e.g. broken hips). By contrast, rates of knee replacement, hip replacement, and back surgery all vary remarkably reflecting the fact that there is far less consensus among physicians about when to do these procedures, who needs them, and how effective they are.* Our job is to analyze data to help identify ways to reduce unwarranted variation in the use of medical resources.
  • Impactable Admissions - This measure assesses any "short stay" admissions. Since many of these admissions can be avoided through lower cost care settings such as observation rooms, urgent care settings, ambulatory surgical centers, and expanded clinic hours, many of these admissions can be avoided.
  • Readmits - This measure tracks the number of hospital readmissions within 30 days after discharge and results are already largely reported throughout Providence-Swedish.

* Information obtained from Milliman and Dartmouth Atlas white papers

Emergency Department Utilization

Walk-in clinics, expanded clinic hours, and other lower cost settings can help lessen the burden on the emergency department while lowering the total cost of care. By monitoring ED visits per 1,000 members, and measuring appropriate ED utilization with methods such as the NYU Avoidable ED Algorithm, we'll be able to identify conditions that should be re-directed from an emergency room to a more appropriate setting.

Reducing Leakage

Keeping patients within Providence, Swedish, or partner medical groups allows for better coordination of care, higher quality experiences, and higher patient satisfaction. Additionally, new products with narrow provider networks are gaining momentum with healthcare purchasers, resulting in higher out-of-pocket costs for patients who receive care at an out-of-network provider. It is therefore important for us to monitor where services are being done to optimize the quality and effectiveness of care given to our patients.

Increasing the Generic Prescribing Rate

One well researched area to reduce the total cost of care is by prescribing generic drugs over more expensive brand-name counterparts. On the whole, physicians in Western Washington, including our own medical groups, have high generic prescribing rates compared to other parts of the country. But, there still is room to improve. The top performing medical groups in the greater Seattle area have generic prescribing rates in excess of 90% which we should aim to meet or exceed.

In addition to these measures highlighted above, there are others we'll be monitoring, such as outpatient surgery procedures per 1,000 members, imaging procedures per 1,000 members, and cardiovascular procedures per 1,000 members.

What You Can Expect

The first step for improving performance in total cost of care management is identifying opportunities by benchmarking performance against well-managed performance. Analytic tools have been purchased to help us in this effort with the goal to be operational later this year. We will continually use analytics to look for opportunities to change the way we do things in order to lower the total cost of care. Reducing our total cost of care is, simply, the right thing to do for our patients and what purchasers are demanding us to do.

As we work to meet our ACO goals, optimizing site of service can provide us the biggest "bang for our buck" to reduce the total cost of care. By shifting services from one site-of-service to another, lower cost setting we can significantly lower the cost of the services we provide. Sites-of-service in order from most expensive to the least expensive are: inpatient facility, outpatient facility, ambulatory surgical center, and physician's office.

The top five site-of-service opportunities are:

  • Surgery: Outpatient, ASC and Office-Based - Achieve savings through replacing OP facility and ASC surgeries with ASC and office surgeries.
  • Outpatient Facility Infusions - Achieve savings through replacing hospital based infusion services with outpatient and office administered infusions.
  • Emergency Room - Achieve savings through replacing avoidable ER utilization with walk-in clinic visits and expanded clinic hours.
  • Outpatient Radiology - Achieve savings through replacing 100% of outpatient radiology services with office-based care.
  • Ambulatory Care Sensitive and Preference Sensitive Admissions - Achieve savings through replacing a portion of the ACSA/PSA inpatient stays with outpatient utilization.

We engaged Milliman to perform a site-of-service study where they estimated savings of 15-25% of total medical spend by using the optimal site-of-service in the commercial population. Medicare savings were estimated in the 5-10% range.

At the ACO of Washington, we've invested in analytics tools to help inform us on how we're performing. We'll be using tools such as PH Analytics and the Crimson Tool to help educate and inform us on which services can be done in alternate settings, and if pricing adjustments need to be made in the traditional setting complementing work and analysis that has already been done. We'll also leverage publicaly available analytics, such as Milliman Care Guidelines, Milliman Research Data, NYU Methodology for ER and AHRQ Dartmouth Atlas.

New committees to review analytics, headed by Rik Emaus, Ralph Pascualy, Tom Yetman, Joe Gifford, and Adam Ceteznik will meet on a regular basis to evaluate how we're doing. They'll evaluate the impacts of all proposed changes, and will determine what steps need to be taken to enact them.