Medicare’s Early ACO Experience

Time for another update on the disruptive (or not) influence ACOs must be having on American health care delivery.  This one relates to the evaluation of CMS’s attempt to promote ACOs, without actually requiring that patients enroll in them.  That is going to turn out just as you would expect.  A study on early experience for Medicare ACOs is published in the New England Journal of Medicine.  (NEJM Article)  The most important fact to note is that 13 of the 32 ACOs in the initial phase of the “Pioneer” program quit.  The study looks at spending related to patients “attributed” to the ACOs and compares it with a control group of patients; adjusting for sociodemographic and geographic factors.  The researchers also tried to find associations between results and the level of spending among the ACO providers before joining the program, the degree of integration between hospitals and physician groups in the ACO and those ACOs that withdrew and those that didn’t.

In the three years before the Pioneer program began, spending was similar for the ACO beneficiaries and the control group.  Overall, after initiation of the program, spending was about 1.2% lower per beneficiary in the ACO group of patients, or about $120 per year.  Most of the savings were in hospital inpatient and outpatient charges and in post-acute care.  There was some compensating increase in physician visits. The change in spending appeared to be the same regardless of the level of financial integration between hospitals and physicians and for ACOs that stayed in the program and those that withdrew.  Greater spending reductions were found in regard to patients in ACOs with higher baseline spending and with those operating in generally Medicare high-spend areas.  So we can conclude that if you are a high-spending provider group and/or you serve patients with high spending, if you start an ACO you might pay a little more attention and save a modest amount of money for Medicare.

Not discussed is the high cost provider groups incur to become and operate as a Medicare ACO.  It is highly unlikely that the groups achieved and shared in enough savings to create any payback.  The provider organizations who left expressed dissatisfaction with the benchmarks CMS used to measure savings, as well as the concept of patient attribution instead of enrollment.  The ones who felt they were already efficient believed CMS gave them no opportunity to have that efficiency rewarded.   Alas, it appears that the ACO concept, at least as conceived and operated by CMS, is not going to be health care’s savior.