Study Shows Pioneer ACO Model May Reduce Medicare Spending

The Pioneer Accountable Care Organization (ACO) Model “exhibited smaller increases in total Medicare expenditures and differential reductions in utilization of different health services, with little difference in patient experience,” when compared to general Medicare fee-for-service (FFS) beneficiaries, totaling an estimated savings of approximately $385 million, according to a study published May 4 in the Journal of the American Medical Association.

The study looked at the first two years of participants enrolled in the 32 pioneer ACOs who were FFS Medicare beneficiaries, (675,717 in 2012 and 806,258 in 2013), compared to a group of alignment-eligible beneficiaries “in the same markets” (13,203,694 in 2012 and 12,134,154 in 2013).

Results showed the total spending for beneficiaries aligned with the Pioneer ACOs “increased from baseline to a lesser degree relative to comparison populations.” Differential changes in spending were approximately -$35.62 per-beneficiary-per-month in 2012 and -$11.18 per-beneficiary-per-month in 2013, which amounted to aggregate reductions in increases of approximately -$280 million in 2012 and -$105 million in 2013.

The authors note that “a large portion of the smaller increase in spending was from decreases in inpatient utilization among ACO-aligned beneficiaries, although greater decreases in primary care evaluation and management office visits, and smaller increases in the use of tests, procedures, and imaging services, also were related to the observed differential changes in spending.” They add that there was “no difference in all-cause readmissions within 30 days of discharge, but follow-up visits after hospital discharge increased more for ACO-aligned beneficiaries.”

“These results are encouraging, given how historically challenging it has been for physicians to achieve spending reductions in Medicare demonstration projects,” the authors write. “Despite decreases in spending growth, results from this study and previously reported data on Pioneer ACOs' performance on clinical quality measures suggest it is possible to reduce expenditure growth while maintaining or improving quality in a FFS payment environment.”

An accompanying editorial by Lawrence P. Casalino, MD, PhD, of Weill Cornell Medical College, Healthcare Policy and Research, New York, notes, “The number of ACO-¬≠like contracts between private insurers is increasing rapidly. The next five years will be critical in determining if ACOs can indeed maintain or improve quality of care at a time when new therapies are emerging and simultaneously control the rise of health care costs.”

Mark McClellan, MD, PhD, of The Brookings Institution, Washington, DC, echoes the same sentiments in a separate editorial, and writes, “This early evidence moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined. Payment reform moving away from FFS is now part of the policy landscape, but the exact form it will take is less clear. Evaluations like this derived from actual payment reforms can provide more clarity.”

Keywords: Accountable Care Organizations, Fee-for-Service Plans, Follow-Up Studies, Health Care Costs, Health Expenditures, Health Services, Inpatients, Insurance Carriers, Medicare, Office Visits, Patient Readmission, Primary Health Care, Research

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