Strategies for Generating Savings in an ACO: Out of Network Utilization


Controlling Costs Outside the ACO and Developing Partnerships to Grow the Network

There are approximately 920 Accountable Care Organizations (ACOs) contracted with public and private payers.  In 2016, Medicare ACOs decreased costs by $836 million, yet only about one-third of them are still generating savings today.

“As more and more organizations get engaged and reduce their cost of care, it's going to get harder, and the amount of savings is going to be smaller,” explained Lee Sacks, MD, Chief Medical Officer at Advocate Health Care in Illinois.  A struggle that successful ACOs often find is that when their benchmarks get lower, it becomes more difficult for them to earn shared savings.  However, achievers NYC Health & Hospitals found success by leveraging data analytics to identify network leakage and by offering services outside of the traditional hospital or practice setting, such as post-acute and skilled nursing care.

Medicare Shared Savings Plan (MSSP) ACOs have not typically been effective at managing leakage.  A recent study confirmed that 55% to 65% of patient care happens outside of the ACO network.  Access to data on service patterns outside the network is essential to effectively identifying leakage and potential care gaps within the network, as well as to generate revenue, while reducing waste.  A strategic step would be to develop partnerships outside of the network with the objective to control costs and achieve better patient health outcomes (such as placing Advanced Practice Nurses (APRNs) that are part of the ACO network into community pharmacies and leveraging minute clinics outside of PCP office hours). 

Executive VP and Chief Medical Officer at Advocate Health Care Lee Sacks, MD provided an example of how Advocate Health Care partnered with Walgreens to help control leakage and utilization.  “We are out in the community for extended hours, 7 days a week as an alternative when a physician practice isn't available.  Our medical group has advanced practice nurses in all of their large sites for walk-in, unscheduled appointments.”  The more accessible walk-in clinics allow for more convenient and available healthcare services and help prevent avoidable high-cost care, such as a trip to an emergency room.

Another consideration is that the cost and quality of post-acute care have such extreme variations.  Medicare spends almost $60 billion a year on post-acute care services.  The Institute of Medicine estimates this could be cut by about 75% if there was more consistency in care quality.

To help mitigate the cost of post-acute care, Advocate Health Care developed a network of preferred skilled nursing facilities (SNF) that are staffed by the ACO with advanced practice clinicians.  This strategy helps to control the costs associated to services that, without the SNFs being brought into the network, would have otherwise been rendered outside the network.

Pulse8 Insight:  Pulse8’s Illumin8 Active Intelligence platform, with our new ACO-focused analytics, helps ACOs to identify areas of leakage, get updated costs and utilization rates outside the network, and understand the risk score and financial impact associated with these services.  The ACO-specific functionality infused into these Pulse8 products – Calcul8™, Qualit8™, and Collabor8™ – provides ACOs with improved risk score visibility, benchmark tracking, and provider performance measurement.  Pulse8 analytics reveal how per capita claims costs are tracking to the expected benchmark and make visible the cost drivers, network leakage, gap closure rates, and other means by which to “bend the trend” and ultimately beat the benchmark.

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