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Results from Medicare ACO Effort

By June 24, 2016Commentary

The idea of an Accountable Care Organization is to create a grouping of a wide set of providers who can meet most of the health service needs of a population of patients; encourage them to engage in care coordination and to use information technology, measure quality in lots of ways, and put them at some financial risk for the costs of the patients’ care.  Then, according to the theory, costs will go down and quality will improve.  CMS has bought into the idea in a big way for the Medicare program.  An analysis published in the New England Journal of Medicine tracks early results from the Medicare ACOs.  (NEJM Article)   The analysis focussed on the Medicare Shared Savings Program, the largest part of CMS’ ACO initiative, and one in which providers don’t have to take downside risk on costs.  The researchers looked at 220 ACOs entering the program in 2012 or 2013 and compared costs from 2008 to 2013, or both before and after the start of program and compared costs with a non-ACO control group.  They also created sub-groups of the ACOs by various characteristics, and they adjusted results based on health, demographic and socio-economic factors of the patients served.

Spending and spending trends were similar in the ACO group and control group prior to the start of the ACO program.  For ACOs starting in 2012, there was a decline of about 1.4% in annual average spending per beneficiary, but for the group starting in 2013 there was essentially no difference.  In the 2012 group, the savings were from reductions in inpatient spending, hospital outpatient spending, skilled nursing care and home health care, with an increase in office-based outpatient care.  Performance on some quality measures improved slightly for the ACO group and was unchanged for most measures.  ACOs comprised of independent primary care groups had better performance than those sponsored by integrated hospital systems.  Not surprisingly, this was because the independent groups had greater reductions in hospital inpatient and outpatient use.  The authors estimate that the 2012 ACO group may have saved Medicare $238 million, but this was more than offset by the $244 million in bonuses paid to these ACOs.  This is a short-term study and really these groups should be given up to five years to show they can begin to meaningfully affect spending and quality trends.  So far, modest reductions, at best, are occurring.

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