Why might an ACO need to forecast performance for their ACO contracts?
With the way most shared savings contracts are structured, ACOs have to wait 6 to 12 months (or more!) to learn how the payer will assess their performance — and ultimately, how much money they will receive or owe. National and regional trend factors, final risk scores (and risk score renormalization), truncation factors, and claims runout are all part of the long delay, and ACOs benefit from them being calculated as accurately as possible. However, that delay does provide a major challenge for ACOs in terms of provider engagement and the timing of strategic decisions. If a reasonably accurate performance forecast can be generated at the close of the performance year, ACOs stand to benefit greatly with quicker responses to projected success and failure.
Forecasting Performance for Provider Engagement
Telling providers how they performed 6-18 months ago is not a very rewarding conversation. In ensuing months, the patient panel will have changed, providers may have left the practice, operational flow may have been reworked. And yet, it is important for ACO leadership to understand which practices and providers in the ACO are loss leaders vs gainshare leaders, and what the driving factors are for their performance (risk scores, expenditures, enrollment type mix, low benchmark, performance relative to region, etc.). Any change to practice patterns requires time to implement, so leadership needs performance feedback as soon as possible. Performance forecasts run at the practice level help ACOs intervene early to improve performance and reinforce successes.
Forecasting Performance for Strategic Decisions
ACOs often stand to benefit significantly when they move to greater downside risk, which is typically accompanied by greater upside potential; however, this move is difficult to undertake if ACOs aren’t yet sure of their success in the prior year. Having a more accurate performance forecast in hand would allow successful ACOs to move confidently into greater risk (and reward) tracks.