• Payment reform;
  • quality of care;
  • efficiency of care

Objective (or Study Question). To determine whether a new payment model can reduce current incidence of potentially avoidable complications (PACs) in patients with a chronic illness.

Data Sources/Study Setting. A claims database of 3.5 million commercially insured members under age 65.

Study Design. We analyzed the database using the Prometheus Payment model's analytical software for six chronic conditions to quantify total costs, proportion spent on PACs, and their variability across the United States. We conducted a literature review to determine the feasibility of reducing PACs. We estimated the financial impact on a prototypical practice if that practice received payments based on the Prometheus Payment model.

Principal Findings. We find that (1) PACs consume an average of 28.6 percent of costs for the six chronic conditions studied and vary significantly; (2) reducing PACs to the second decile level would save U.S.$116.7 million in this population; (3) current literature suggests that practices in certain settings could decrease PACs; and (4) using the Prometheus model could create a large potential incentive for a prototypical practice to reduce PACs.

Conclusions. By extrapolating these findings we conclude that costs might be reduced through payment reform efforts. A full extrapolation of these results, while speculative, suggests that total costs associated to the six chronic conditions studied could decrease by 3.8 percent.