Problem
Under the U.S. Affordable Care Act, health care providers are encouraged to improve the coordination of care for Medicare patients through the formation of accountable care organizations (ACOs). The Centers for Medicare & Medicaid Services (CMS) defi nes ACOs as "groups of doctors, hospitals, and other health care providers who come together to give coordinated high-quality care to their Medicare patients." The program not only aims to improve quality of care, but also puts incentives in place to help curb rising health care expenditures for Medicare patients. An ACO can share in the cost savings it achieves for the Medicare program. Batten Health, a fee-for-service multispecialty group practice, is considering participation in the Medicare Shared Saving Program, Medicare's largest ACO program. Before committing to an ACO model, the leadership team at Batten Health would like to determine whether ACOs really are more cost-effective by analyzing the performance results for year 1 of the Medicare Shared Savings Program.
I. Navigate to data cms gov. Select the "ACO" category and locate the "Medicare Shared Savings Program Accountable Care Organizations Performance Year 1 Results" data set. Click "Export" and download the file into MS Excel format.
II. Develop a linear regression model that predicts total expenditures based on the number of assigned beneficiaries.
III. Predict expenditures when the number of assigned beneficiaries is 10,000. What is the percentage change in predicted total expenditures when the number of beneficiaries increases from 10,000 to 20,000?
IV. Predict expenditures when the number of assigned beneficiaries is 50,000. What is the percentage change in predicted total expenditures when the number of beneficiaries increases from 50,000 to 60,000?
V. Predict expenditures when the number of assigned beneficiaries is 100,000. What is the percentage change in predicted total expenditures when the number of beneficiaries increases from 100,000 to 110,000?
VI. What is the predicted number of assigned beneficiaries when total expenditures are $100 million? What is the predicted number of assigned beneficiaries when total expenditures are $500 million?
VII. Based on your analysis, does this model suggest that ACOs are more cost-effective? Support your conclusion.