ACOs for Rural and Underserved Areas

By August 12, 2019 August 13th, 2019 Commentary

Accountable care organizations are one tactic being used to get larger groups of providers organized to help change care processes and payment methods in the hope of reducing spending, while perhaps also improving quality of care.  Most ACOs are in urban areas, where there are large numbers of providers.  Rural areas in particular tend to have many fewer health resources and those resources may actually be diminishing.  Many small town hospitals have closed in recent years.  CMS has been concerned about the ability to form ACOs, and deliver other innovations, to rural and underserved areas, and has launched specific pilots or demonstrations to help with the formation and operation of ACOs in these areas.  One such mechanism is the ACO Investment Model which provides upfront and ongoing payments to help create ACOs in these areas.  Research in the New England Journal of Medicine examines early results of that program.   (NEJM Article)  To participate providers had to be rural or small hospitals, federally qualified clinics, rural health clinics and similar providers.  CMS paid the ACOs $250,000 up front and $36 per beneficiary for up to 10,000 of them.  They then received $8 per beneficiary per month for the first two years.  So quite a bit of capital to build infrastructure, etc.  The beneficiaries attributed to these ACOs were compared to similar beneficiaries not in an ACO in terms of spending and other outcomes.  Over 1,100,000 beneficiaries were attributed to these rural and underserved area ACOs and their outcomes were compared to almost 6,900,000 other beneficiaries.  Over 75% of the beneficiaries were in rural areas.

After usual adjustments for characteristics of the beneficiaries, spending for the ACO patients was about $28 per month less than that for the comparison group, or about 2.8%. Most of the decrease was due to lower inpatient spending, less outpatient facility use and lower skilled nursing facility costs.  Patients in the ACO were somewhat less likely to have an inpatient admission or an ER visit.  There were slight increases in use of physician visits and testing.  In total Medicare saved around $90 to $130 million in spending.  The cost of the program to CMS in upfront, ongoing and shared savings payments was $82.4 million, so there was apparently a net savings.  In sensitivity analyses, it appears to me that there is some question about whether the level of savings reported actually occurred, given trends in both groups before the intervention.  Despite some methodological issues, it is important, I think, for CMS to address these rural and underserved areas and to find ways to bring improvements in care to these beneficiaries, especially as provider access may decline in these geographies.  And I think CMS should support this whether there are huge savings or not.

Kevin Roche

Author Kevin Roche

The Healthy Skeptic is a website about the health care system, and is written by Kevin Roche, who has many years of experience working in the health industry through Roche Consulting, LLC. Mr. Roche is available to assist health care companies through consulting arrangements and may be reached at khroche@healthy-skeptic.com.

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