Issue Brief | Apr 26, 2016

Tricky Problems with Small Numbers: Methodological Challenges and Possible Solutions for Measuring PCMH and ACO Performance

Nancy McCall and Deborah Peikes, Mathematica Policy Research

With health care providers increasingly being rewarded based on changes in cost of care, it is critical that sufficient statistical safeguards are in place to ensure that payment arrangements fairly reflect provider performance rather than random variation in medical utilization.  The underlying changes in cost of care for populations served by patient-centered medical homes (PCMHs) and accountable care organizations (ACOs) are difficult to accurately assess when there are a small number of attributed patients.  This issue brief, developed by Nancy McCall and Deborah Peikes at Mathematica Policy Research,  identifies methodological challenges in measuring cost of care performance for organizations with a small number of attributed patients, and provides concrete strategies and resources for state purchasers to address this methodological challenge when evaluating PCMH and ACO cost performance and applying financial incentives and disincentives.