Risk and Retention: Would you Bet on a Horse you knew Nothing About?

Many differences exist across the spectrum of ACO tracks in the pursuit to balance risk and reward, but there is a problem that they all face: beneficiary churn. The churn rate is the number of beneficiaries that start and end the year with their attributed ACO. Fluctuation of beneficiaries within each ACO is inevitable because a true Medicare beneficiary does not have a narrow network or a mandatory referral system.

However, the fluctuation can be lessened if the primary care physician places themselves as the quarterback of care.

The lack of patient stability creates a problem for ACOs because it does not align with their overarching theme: if the primary care physician sees their patients on a regular basis and coordinates across the care continuum, then the overall cost of care will decrease. Additionally, the change of healthcare reimbursement from a fee-for-service payment system to one that pays for value and outcomes is one that shifts financial risk from the payer to the provider.

If the providers are not holding attribution at a steady rate, then any additional risk will become difficult to undertake, which is to essentially have the providers risk their reimbursements on providing care at a lower cost with higher value to beneficiaries that they can’t account for.

The amount of risk ACOs undertake also varies by track; with those in track 1 without any downside risk. Nonetheless, the movement of risk is underway, and with that comes the need to fully understand the movement of beneficiaries in and out of the organization.

In other words, getting to know your horse.

For those ACOs that have retrospective assignment (tracks 1 and 2) we know that a prospective list of assigned beneficiaries are provided to the ACO, and then lists of newly assigned beneficiaries, leavers, and re-joiners are supplied on a quarterly basis until the final reconciliation at year end. Those ACOs with retrospective assignment get real-time feedback on churn, but should strive to keep no less than 70% of their assignment from the start of the year to the end.

As for those ACOs that have prospective assignment (tracks 1+, 3 and Next Generation) they are provided with a prospective list of beneficiaries and are only given lists of excluded beneficiaries quarterly (no additions). The difference is that although beneficiaries may be technically attributed all year, they may not actually visit the same primary care physician they once did, therefore, leaving the ACO responsible for the total cost of care despite lack of true attribution.

The importance of understanding the patterns of attribution to the ACO and its relationship to taking on financial risk is one that will ultimately affect the total cost of care.

If you don’t do your research, then it makes the gamble riskier.

The problem is, however, that the bet is on physician reimbursement and risking providers’ livelihood is not a risk an organization should undertake without understanding the whole picture. It is within the primary care physicians’ wheelhouse to coordinate care, which will then lead to lower churn; therefore decreasing financial risk of the population.

Amy Kotch

About the Author

Amy Kotch, MHA

Amy Kotch is Salient’s Lead Business Consultant working with ACOs nationwide. She received a masters in health administration from Florida Atlantic University as well as a bachelors of science from the University of Miami and has just recently completed a master certification in population health through a federal grant from the Office of the National Coordinator for Health Information Technology in conjunction with the Johns Hopkins University and Normandale Community College. Her prior work includes being the operations coordinator at Triple Aim Development Group consulting with ACOs/MSOs.

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