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Accountable Care Organization Pricing Model

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Presentation on theme: "Accountable Care Organization Pricing Model"— Presentation transcript:

1 Accountable Care Organization Pricing Model
Josh Miller, FSA Head of Actuarial – Americas, Aetna International Gao Niu, Ph.D., ACAS, MAAA Assistant Director, Goldenson Center for Actuarial Research

2 Table of Content What is Accountable Care Organization (ACO)?
One Funding Approach – Fixed Payment Why Accountable Care Organization? Pricing Example Experience Data and Practical Perspective Pricing Model A/E Analysis What’s Next?

3 1. What is Accountable Care Organization?
Health Care Provider led coordination around their local population designed to: Improve the quality of care provided Reduce the overall cost burden of care provided Improve patient/community satisfaction A major component necessary for Accountable Care Organizations to execute these goals is the financial mechanism used to incentivize behavior changes.

4 2. One Funding Approach–Fixed Payments
Patients Insurance Patients Insurance 1 1 Pay Premium Pay Premium Bill Insurance Company for Excess Loss 3 Bill Insurance Company 2 4 Provide Health Care Services Provide Health Care Services 2 Get Paid by fixed amount for each assigned patient 3 4 Get Paid Get Paid for Excess Loss 5 Health Care Provider Health Care Provider Accountable Care Organization

5 3. Why Accountable Care Organization?
Doctors Perspective: Less Incentive for Over Treatment No financial pressure to become a businessman Protected by large losses or complicated surgeries Policyholder/Customer Perspective Ultimate Premium Reduction Avoid Unnecessary Treatment Insurance Perspective: Significant Risk Transfer Loss Control

6 4. Pricing Example

7 5. Experience Data and Practical Perspective
2013, 2014 and 2015 claim data and exposure data 7.2 millions records in the 2013 claim data alone

8 5. Experience Data – Medical Cost Category

9 5. Experience Data - Specialty

10 6. Pricing Model - Clustering
Specialty Grouping Specialty1 Cardiothoracic Surgery Specialty2 Neurosurgery Specialty3 Vascular Surgery Specialty4 Cardiology, Pulmonary/Critical Care Specialty5 Cardiology Surgery Specialty6 Other Specialty7 Obstetrics/Gynecology Specialty8 Surgery, Plastic Surgery, Nephrology, Infectious Disease Specialty9 Orthopedics, Neurology, Urology, Otolaryngology, Gastroenterology Specialty10 Dermatology, Endocrinology Specialty11 Rheumatology, Ophthalmology, Allergy/Immunology

11 7. Pricing Model – A/E

12 8. What’s Next Data Mining on both medical and pharmaceutical claims data Claims Tracking and Monitoring Morbidity based Mortality for Life Insurance


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