The Accountable Care Organization's (ACO's) expected total cost of care (ETCOC) is derived based on actuarial projections of the cost of care in 2017 for the population of prospectively attributed Medicaid members, using 2015 claims for the attributed members as a baseline and trending it forward to 2017.
The ACO’s actual total cost of care (ATCOC) is the sum of the Fixed Prospective Payment (FPP) paid to the ACO and the total actual Fee-For-Service expenditures paid by DVHA on behalf of the ACO to its providers for services not covered by the FPP.
The ACO has agreed to a risk-based spending target for the full attributed population during the performance year. If the ACO exceeds its spending target for the Performance Year, it is liable for expenses up to 103% of the target; if the ACO spends less than its target, it may retain savings to 97% of the target. This arrangement provides an incentive to use resources efficiently. If the ETCOC and ATCOC are equal, then the ACO’s actual spending is on consistent with its projected spending for the performance year, and a minimal amount of financial reconciliation will occur between the ACO and DVHA during the final financial reconciliation. If the ETCOC is greater than the ATCOC, the ACO’s spending has been less than the financial target, and the ACO would be eligible to retain a portion of the dollars saved relative to the target. Conversely, if the ATCOC is higher than the ETCOC, the ACO’s spending has exceeded its financial target, and the ACO would be liable for a portion of the dollars spent in excess of the target.
Caution should be exercised when using this information to evaluate financial performance during the performance year, as claims lag has a significant impact on financial data, and the data does not factor in claims or payments that will need to be reconciled after the program year. At this time, the ACO’s overall expenditure for January through June of 2017 is higher than the expected total cost of care for the corresponding months.
Last updated: 10/30/19