6.3 How should savings be allocated and what will be the effects?


In Medicare programs to date, savings have been used in two ways: to incentivize medical care providers (e.g, IAH and ACOs) and to preserve funds for Medicare (e.g., shared savings in ACOs and BPCI). These are both worthy endeavors, and MediCaring Communities will undoubtedly need to have some savings used in these ways. However, a MediCaring Community also aims to incentivize patients, families, physicians, and everyone else to be prudent and save Medicare funds, in accord with the patient’s preferences. Doing so also supplements LTSS and enables measurement and management of the overall eldercare service delivery system. In addition, many programs will have some start-up costs to pay back and some will need reserves in order to take on risks for unanticipated expenditures. This makes for a complicated allocation issue, with legitimate claimants with different agendas and priorities.

In this situation, the Community Board should anticipate what they can and make decisions in the public interest. Considering the well-being of the community is an exercise that will acknowledge such disparate facts as these: that the community needs to develop and retain an excellent workforce, that wait lists for critical services need to be reduced, and that everyone has an interest in preserving Medicare’s financial well-being. The public will want both to preserve Medicare funds and also to have their MediCaring Community succeed in serving frail elders well. A best balance of these goals might be to return a share of savings to Medicare only after a few years of getting the initiative underway, but to settle the proportion in initial agreements as the work starts. In many poor communities, the major spur to the economy is funding coming in for health care and social security, which makes another consideration militating for gradual adjustment of that support.[192]

Likewise, if the MediCaring Community endeavor had to borrow start-up funds (including in a social impact bond or pay for success instrument), the agreements made to pay back those loans will need to be honored. Again, the legal agreements set up at the start would do well to allow some time before payback starts so that the elder-centered care initiative can establish itself well in the early years.

The MediCaring Community endeavor will include the medical care systems that are generating the savings, so there will need to be formal agreements as to how to account for revenues and savings and what portion will supplement incomes or otherwise address the proper self-interests of the health care providers. These agreements could take many forms—for example, incentives for productivity or quality or both, income maintenance guarantees, paying off educational loans, recruiting support staff or specialists, or providing medical diagnosis or treatment equipment. The needs of the medical service providers could be handled in the mix with all other community needs or could be a settled aspect of the allocation.

In deciding allocation of savings among service gaps affecting elders, the Community Board (Core Component 5) needs to have a strong voice in setting priorities. The Board should weigh data about the community’s supply (both oversupply and undersupply) of services, distribution of availability, and quality concerns. Data about the lived experience of elders and their families will be critically important. The Board itself needs to work on representing community interests well, taking account of public perception, and being able to make decisions and move along.

Obviously, some regular allocation of the savings will also go to the operations of the services provided in the MediCaring Community: e.g., to gather and analyze data, to hold meetings and handle funds, to advocate policies and educate the public.

Here are some of the key considerations that shape a MediCaring Community revenue management plan:

  • Must be auditable and publicly accountable at every stage;
  • Must support a trustworthy, reliable set of service providers committed to implementing good care plans;
  • Must efficiently support the staff who monitor service supply and quality, manage the data, and provide the administration;
  • Must responsibly adhere to the evidence-supported conclusions of the Community Board as to priorities among service needs; and
  • Must have a settled and fair method for calculating savings with Medicare.

[192] (Berwick and Hackbarth 2012)

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