June 4, 2014
By: Mark D. Hiatt, MD, MBA, MS and Timothy R. Johnstad, MBA
Popularized by their inclusion in the Patient Protection and Affordability Care Act, accountable care organizations (ACOs) may be for the coming decade what health maintenance organizations (HMOs) were during the 1970s. Like HMOs, ACOs are formed by a group of coordinated health care providers who agree to be accountable for providing comprehensive health services to an assigned population of patients. Perhaps more than HMOs, ACOs seek to tie reimbursements to providers to quality metrics and reductions in the cost of care, with accountability to the patients and third-party payers for the quality, appropriateness, and efficiency of the care provided.
ACOs have another parallel: to radiology benefits management companies (RBMs). Both ACOs and RBMs seek to improve health outcomes and decrease costs through reducing unnecessary medical care. Since ACOs are relatively new, the impact of the interplay between them and RBMs remains to be clearly characterized. For example, will synergy arise from the concurrence of both? Conversely, will the presence of one preclude the establishment of the other? In particular, with respect to the latter, will the pre-existence of an ACO, which places a degree of financial responsibility on providers to improve care management and limit unnecessary expenditures, fulfill these goals so satisfactorily that no waste would remain for an RBM to address?
This paper reports on the results of such an experience in which RBM oversight was added to a pre-existing ACO-like entity, namely a network in which many of the affiliated providers were incentivized to control costs through capitation. Would costs thus be controlled to such an extent that further significant reduction would not be achievable through RBM? Or would RBM benefit the network regardless of the incentives to reduce inappropriate utilization already in place?
The described network was comprised of 60 providers in a state in the central United States serving over 16,000 patients enrolled in a Medicare Advantage plan. This network had many characteristics of an ACO: provider-led, with a strong base of primary care providers (PCPs) who were collectively accountable for quality and costs across the full continuum of care, and whose payments were linked to quality improvements that also reduced costs, with performance measured through reliable and progressively more sophisticated means to support improvement and provide confidence that savings were achieved through improvements in care.
The RBM, HealthHelp (based in Houston, Texas), was one of the five major companies managing the utilization of advanced diagnostic imaging for health plans in the U.S. Suited to the collaborative philosophy of ACOs, the chosen RBM’s approach to utilization management was considered to be at the more conciliatory end of the spectrum in the industry, with a focus on educating providers on the latest evidence-based standards. Advanced diagnostic imaging modalities for which providers had to seek pre-authorization included CT, CTA, MRI, MRA, and PET. Unlike many traditional RBM programs, the RBM solution implemented for this health plan did not end with a hard denial if the pre-authorization conversation ended with continued disagreement, emphasizing the collaborative, as opposed to dictatorial, basis of the selected approach.
The timeline of the trial aligned with the date that utilization management was implemented for the health plan (March 1, 2011). Measurement occurred over three periods, each one year long, including two full years preceding and one year following the RBM implementation. The three periods are defined as:
– Year 1, March 1, 2009 to February 29, 2010,
– Year 2, March 1, 2010 to February 29, 2011, and
– Year 3, March 1, 2011 to December 31, 2011.
Due to delay in claims processing, data for the final two months of Year 3 (January and February 2012) were not available at the time of printing.
Over each of these periods, average utilization rates, defined as the number of units performed per thousand members, declined year-over-year by 3 and 22% in Years 2 and 3, respectively (Figure 1).
The reduction in utilization was immediate and sustained following the RBM implementation, with the health plan experiencing year-over-year reductions in all months during Year 3 (Figure 2).
The decline in utilization over each of the periods translated into a decrease in costs, defined as the total cost per member per month (PMPM). On average, PMPM costs decreased by 3 and 19% in Years 2 and 3, respectively (Figure 3).
This analysis suggests that the impact of RBM is additive to that of an ACO approach in decreasing costs through reducing unnecessary medical care. In this example, when RBM oversight was added to a pre-existing ACO-like entity (namely a network in which many of the affiliated providers were incentivized to control costs through capitation), costs were controlled to an even greater extent than achieved through imposition of ACO-like incentives alone (in which a degree of financial responsibility was placed on providers to limit unnecessary expenditures). RBM may thus benefit a network regardless of the incentives to reduce inappropriate utilization already in place, whether they emanate from the establishment of an ACO or from some other similar arrangement to improve care.
Figure 1: Average CT, MRI, and PET utilization rates per thousand members.
Figure 2: Monthly year-over-year decline in utilization for CT, MRI, and PET.
Figure 3: Per member per month costs for CT, MRI, and PET.