This measure is important because it describes the financial performance of the VMNG ACO program by showing the expected price of care for the performance year and comparing it to the actual expenditures incurred during the performance year by ACO-attributed members for ACO-covered services.
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 the performance year, using the historical claims amount for the population of prospectively attributed Medicaid members as a baseline and trending it forward to the performance year.
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.
If the ETCOC and ATCOC are equal, then the ACO’s actual spending is 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. This arrangement provides an incentive to use resources efficiently.
Narrative last updated: 12/22/2020