Applying Sutton’s Law To Alternative Payment Models For The Seriously Ill

When asked why he robbed banks, Willie Sutton, the infamous US bank robber, responded “because that’s where the money is.” This quote is the inspiration for “Sutton’s Law,” which recommends prioritizing those diagnostic tests that are most likely to yield a definitive diagnosis and quickly lead to a treatment recommendation. While Sutton’s Law has been applied to diagnostic testing, this commonsense approach is also applicable to the important policy decision of who should have access to alternative payment models (APMs) for the seriously ill.

The Center for Medicare and Medicaid Innovation (the Innovation Center) recently announced a new demonstration to test an APM for the seriously ill with the goal of improving the quality of care while reducing costs. The key piece of this policy innovation would allow patients to continue curative treatment for their serious illness while also receiving palliative care. This is an improvement over the current practice, which requires individuals to agree to forgo curative treatments when receiving palliative care, a policy often cited as a barrier to hospice enrollment and referred to by some commentators as the “terrible choice.” While the final request for application has not been released, in its initial announcement the Innovation Center stated it will use Medicare administrative data to identify eligible patients. For this APM to be successful, it will need to identify the optimal denominator of persons with both the need for these services and who are at sufficient risk of costly hospitalizations. As long as cost neutrality or reducing costs is a guiding policy objective, an APM for the seriously ill will not be successful if it enrolls people with stable impairments in activities of daily living (ADL) without sufficient risk of avoidable hospitalizations. Key to the success of this APM is identifying the correct denominator.