The Intersection of FFS and VBC Medicine: ACP
by Jonathan Hart, MD MBA
We’ve been looking at the intersection of fee-for-service (FFS) and value-based care healthcare delivery models within a primary care (PCP) office. Annual Wellness Visits (AWV) and HEDIS® measures tend to get most of the attention in discussions of VBC in a PCP office, but they have an often-forgotten cousin that can have at least the same impact on both positive patient outcome and shared savings revenue – Advanced Care Planning (ACP).
ACP is a face-to-face service (including telemedicine) where a patient and their physician discuss the patient’s health care wishes should they become unable to make decisions about their care. Things like advance directives and Health Care Proxies are discussed. [You can generally find ADs on your State attorney generals’ office website.]
Medicare pays for ACP as either an add-on element of a patient’s AWV (with no added copay for the patient) or as a separate Medicare Part B medically necessary service when there’s been a change in patient status (patient copays apply).
From a fee-for-service perspective, the activity adds reimbursement revenue for the physician. When documented properly as part of the AWV and more than 15 minutes is spent on the task by the office staff, ACP adds $85 to the reimbursement of the AWV service with no added copay by the patient.
As with all the other activities already discussed in this series, ACP has bonus good news features – patients benefit greatly from advance care planning with better experiences and improved outcomes while medical expense is lowered in cases where ACP is properly completed and documented. The palliative care literature has long touted the improvements to both patient experience as well as improved quality of life outcomes. Let’s look at the medical expense benefit.
A 2018 study by William Bond MD MS, et al looked at the impact of ACP on medical expense.1 They found that ACP increases documentation of advanced directives and was associated with a reduction in overall costs of $9,500 per patient per annum when ACP was performed in the last 12 months of life. The cost reduction was driven primarily by a decrease in inpatient utilization.
Let’s look at some numbers.
According to the CDC, looking at pre-COVID death rates, traditional Medicare patients have the following chance of death in the next 12 months by age categories (these were all a bit higher in 2020):
65-74: 1.8%
75-84: 4.3%
85 and over: 13.2%
Medicare populations in FFS ACOs, which would represent typical Medicare FFS age groupings overall, (based on CMS ACO performance data) shows the following split of population by these three age groups within a typical ACO population:
65-74: 53%
75-84: 33%
85 and over: 14%
Applying the death rates to the proportion of populations in each age group, a blended death rate for a typical Medicare cohort is 4.18%.
So, in rounded terms (for easier math!), about half of a Medicare cohort is age 65-74 with a 2% chance of mortality over 12 months. A third of the patients are 75-84 and have a 5% chance of death in 12 months. And about 15% of the cohort will be over 85 with a 15% chance of death in 12 months. Again, for ease, we’ll use the overall blended death rate for a typical Medicare population as 5% chance of death in the next 12 months.
Therefore, about 5% of a typical Medicare cohort will die in the next 12 months.
What’s the financial benefit of universal ACP in Medicare patients?
In a full-risk model, where revenue from services offsets the savings revenue in medical expense ratio, if ACP is properly performed:
1000 patients at $85 per documented ACP = $85,000 spend and revenue
Fifty of those patients would be in their last 12 months of life
At $9,500 potentially saved for those 50 patients, the exercise of discussing and documenting end of life plans would potentially save $475,000
ROI = 5.6 to 1 with a projected net savings of $390,000 per 1,000 patients (excluding the E&M revenue from ACP reimbursement).
With an average ACO size of 23,000 members (based on CMS ACO performance data), that’s $8.97 million in projected savings per ACO per year.
Given this information, especially given my propensity toward risk stratification, the temptation is to identify patients more at risk of death in the next 12 months and focus solely on them.
If one focused solely on patients 75 and up, the benefit ratio is greater, of course, but the savings opportunity is lower. Blended projected death rate over 12 months for the 75+ subsegment would be around 7% (6.88%). Of the 1,000 Medicare patients, only 470 would have ACP performed at a cost of $39,950. Of this group, 33 would be projected to be in their last 12 months. Savings in this case would be $313,500, with an ROI of 7.8 to 1 with a projected net savings of $273,550 per 1,000 patients.
Obviously, this could be fine-tuned even more based on risk stratification parameters other than age, like presence of certain chronic conditions like diabetes or heart failure, or new conditions like cancers with short overall survival rates. Such refinements would further increase ROI but decrease savings revenue potential, and, perhaps more importantly, miss the opportunity to engage patients in their care in a way proven to increase their experience and quality of life. Therefore, there is a case to be made for having an advanced care planning discussion with every patient, every year.
A hybrid approach of try for all and focus based on age and diagnosis might be the most rational approach. Consider these benefits:
Routine, annual discussion about end-of-life issues will make physicians and providers more comfortable with the topic
Routine, annual discussion about end-of-life issues will make patients and families more comfortable with the topic, and make these discussions more fruitful
It can easily become a part of the AWV, which has multiple other benefits
Everyone has some risk of death in the next 12 months, so setting the foundation for planning is important for all
A potential ROI of around 5 to 1 makes the financial case for universal ACP for patients over age 65 from a cost and savings perspective.
The rate-limiting steps to reaching these results are reminders to do ACP, an easy tool to perform ACP, and physician/provider comfort and expertise in performing a proper ACP. This is where technology platforms and a bit of training can be of assistance. We’ll discuss this is the final blog series installment.
1 Bond, MD, MS, William F., et al (2018) “Advance Care Planning in an Accountable Care Organization Is Associated with Increased Advanced Directive Documentation and Decreased Costs.” JOURNAL OF PALLIATIVE MEDICINE, Volume 21, Number 4, 2018
