People with chronic health conditions are high users of health care services. They also are more likely than others to be subjected to “care defects” such as errors, avoidable hospitalizations and other process failures. The structure of the health system, however, does not provide incentives for providers to reduce potentially avoidable complications (PACs).
The researchers applied the Prometheus Payment model’s analytical software to a claims database of 3.5 million insured people to analyze total costs of care, amount spent on PACs and variations across the country for six chronic conditions—congestive heart failure, coronary artery disease, diabetes, hypertension, chronic obstructive pulmonary disorder and asthma. The model provides an allowance for PACs, whether or not they occur, creating an incentive for providers to avoid complications in order to not spend the allowance. Patients would receive better care and providers would increase their margin per patient (amount paid less amount spent on care).
Researchers found that one-third of medical spending was consumed by PACs with the remaining spent for “typical” services. Using payment reform to reduce PAC rates for states ranked above the second decile level to that of states at the second decile would yield a 3.8 percent savings or $116.7 million in this population alone.