AccuReports® makes it easy to identify opportunities to improve financial performance of risk, shared savings and incentive contracts. This begins with the concept of the medical cost budget, from which all related analysis of performance derives.

The medical cost budget is by definition the fraction of premium available for providing medical care to a panel of patients.  That fraction is expressly the premium available to the plan multiplied by the target medical loss ratio for the provider group, and in AccuReports® by FRG, it is called Funding. The equation is below.

Premium x Medical Loss Ratio Target = Funding

When a panel consumes more resources than are available for its care, we begin to observe the formation of a deficit. If the pattern continues over time, the deficit accumulates.  On the other hand, if the panel consumes less resources than are available, a savings is created.  No savings, no incentive.  Focusing on creating a savings means focusing on the medical cost budget.

Each month of data provides new information about prior period expenses (which we refer to as restatement), and a first look at the new month of data.  The aggregate panel performance over any period of time can change due to events present and the engagement of the primary care providers managing the risk adjustment, unit cost and utilization trends for the panel.  These dynamics are complex, and panel managers (i.e. primary care providers in a risk or shared savings arrangement) should focus on those.  Premium is upstream from this analysis.

Premium represents the funds available to the health plan for administration of care delivery to its enrolled membership.  Premium changes due to risk adjustment, which requires a coordinated effort between the plan and provider group, but relates to the medical cost budget in a linear way.

Premium, therefore, is excluded from most reports in AccuReports® by FRG to be sure that users focus on their medical cost budget performance.  Of course, risk adjustment initiatives can change the value of premium over time, but due to the linear relationship based on the medical loss ratio target, Funding moves predictably and should be sufficient to measure the effects of those efforts.

The provider group need only understand the magnitude and direction of the changes in Funding to understand how it will affect their performance against the realized Medical Loss Ratio (MLR), which can be improved by managing the many cost levers visible in the reports like inpatient spend, pharmacy costs, specialty trends and emergency department frequency through consistent, thorough and timely review of the related reports.

In value-based contracts, the performance