The Kinetix Group recently released a white paper, entitled Emerging Payment Models, co-authored by John Strapp, Len Fromer, and John Walker. This is part of a series of posts highlighting its themes. To download the paper and read more, click here.
Strategic, technologic, and methodological shifts have enabled the change towards emerging payment models. In the upcoming posts of “The Emerging Payment Models” series, we will examine three models and best practice case studies that illustrate the impact of its adoption. The three models include the Total Cost of Care Model, the Pay for Coordination Model, and the Bundled Payment/Episode of Care Model.
This post highlights the Total Cost of Care (TCC) model. The TCC payment model involves providing a single risk-adjusted payment for the full range of health care services needed by a specified group of people for a fixed period of time.
In essence, TCC is a composite measure of costs and utilization for a person or a population. As the sum of all medical expenditures, it is more than just a metric or an approach; it is a concept that brings together all metrics related to access, quality, and costs to measure the impact of the total cost of care.
An example of the relationship between TCC and better health is evident in the value-based approach implemented by Colorado Medicaid. The Colorado Medicaid Accountable Care Collaborative (ACC), implemented in 2011, is working to improve health outcomes through a coordinated system that proactively addresses population health needs and controls costs by reducing avoidable, duplicative and inappropriate utilization. When designing and implementing this program, it was well understood that changing the Medicaid system would be an evolutionary process. After one year, without full-scale implementation, the ACC is showing significant progress toward meeting this goal.
Within this initiative, healthcare providers utilized illness burden risk scores and care coordinators provided non-medical, high quality, and efficient services. In addition, key performance indicators were utilized to advance care management for complex, costly population segments and patients. The initiative reduced hospital readmissions by 8.6% and reduced utilization rates of high cost imaging services by 3.3%.
In addition to health improvements, the Colorado ACC is also showing cost savings. According to the 2012 ACC annual report, the department calculated “a range of estimated gross program savings between $9 million and $30 million” for FY 2011-2012.