New healthcare payment models: risk scores aren’t enough to guide resource allocation

Around the world, aging populations compel healthcare delivery systems to improve how they allocate increasingly scarce resources. In parallel, economic pressures motivate healthcare payors and policy makers to adopt global budgeting and accountable payment models based on actuarial risk. We investigated whether these risk-based approaches could apply to healthcare resource allocation. Because a significant portion of healthcare resources for older adults is currently associated with potentially avoidable hospital admissions, we focused our investigation on allocating care coordination resources targeted toward those most likely to be admitted. Using a computational risk-based analysis of claims data, we found the 20% highest expected hospital utilization segment had an average hospitalization rate of over 68% per year, compared to 27% for the overall study population. However, only half of all hospitalizations in the study population were accounted for in the top 20% risk segment. Additionally, 63% of beneficiaries in the top 20% risk segment experienced zero hospitalizations. Our results indicate that risk-based resource allocation may fail to target some high hospital utilizers while allocating resources to many who are never hospitalized. These results further indicate that risk-based expectation of hospital utilization may be insufficient as a basis for effective allocation of care coordination resources.