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March 6, 2017

Research suggests ACOs effectively reduce costs, improve quality

Daily Briefing

Recent research published in JAMA Internal Medicine suggests that accountable care organizations (ACOs) effectively reduce costs and improve health care quality for Medicare and Medicaid beneficiaries.

Study finds MSSP ACOs saved money without reducing quality of care

For one study, Harvard Medical School researchers examined Medicare data between Jan. 1, 2009, and Dec. 31, 2014, to look at post-acute care spending in the Medicare Shared Savings Program (MSSP). The researchers calculated differences in post-acute care spending for hospital admissions and skilled nursing facility stays by comparing beneficiaries served by ACOs with beneficiaries who saw local non-ACO health care professionals. The estimates were made for ACO cohorts entering the MSSP in 2012, 2013, and 2014.

The researchers found that the 114 ACOs that joined MSSP in 2012 "were associated with a 9 percent reduction in post-acute care spending by 2014." Those ACOs saved $106 per beneficiary in post-acute care spending and $77 per beneficiary on inpatient spending when compared with beneficiaries served by local health care professionals not participating in an ACO.

ACOs that joined MSSP in 2013 were associated with skilled nursing facility spending reductions of $27 per beneficiary in 2014. ACOs that joined the program in 2014 were not associated with significant changes in SNF spending, according to the study.

The researchers said the savings stemmed from a reduction in:

  • Acute inpatient care;
  • Discharges to post-acute care facilities instead of patient homes; and
  • Lengths of stay.

The researchers wrote that MSSP participation resulted in savings without "ostensible deterioration in quality of care."

Michael McWilliams, a professor of health care policy at Harvard Medical School and the study's lead author, said, "The savings appear to be growing over time." He added, "Many people have written off ACOs as not working. But over time, the savings have materialized."

Study examines different Medicaid ACO approaches

For the second study, researchers compared the performance of Medicaid ACOs in Colorado and Oregon that launched in 2011 and 2012, respectively. The researchers looked at data spanning from July 1, 2010, through Dec. 31, 2014, on 452,371 Medicaid beneficiaries in Oregon and 330,511 Medicaid beneficiaries in Colorado.

According to the researchers, Oregon's Medicaid ACO model covered about 90 percent of the state's Medicaid beneficiaries under 16 Coordinated Care Organizations. Providers participating in the program assumed "full financial risk" for their patient populations and had to manage their patients' care "within a global budget." Oregon received about $1.92 billion in federal funding to help implement the program.

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Colorado's Medicaid ACO model "was more limited in scope and implemented without substantial federal investments," according to the researchers. Providers under the model were paid on a fee-for-service basis, and did not assume downside or upside financial risk for their patients. Colorado instead created seven Regional Care Collaborative Organizations, which by 2014 were providing care to about 70 percent of the state's Medicaid beneficiaries. The organizations received a set amount of funding per month per beneficiary "to provide administrative support to improve connections between Medicaid enrollees, providers, and community services," the researchers wrote. The state spent about $155 million to implement the model, according to Modern Healthcare.

The researchers found Oregon's program better improved access to care when compared with Colorado's program. Oregon's program also reduced avoidable emergency department visits more than Colorado's program.

But overall, the researchers found that Colorado's and Oregon's ACO models had similar outcomes even though they were implemented differently. For instance, the two programs similarly reduced inpatient care days and spending, which occurred at the same time as a national slowdown in health care spending, the researchers noted. They wrote that Oregon's ACO model "did not generate" the amount of savings that might have been "anticipated," but added that participating providers might "need more time to fully implement changes that translate to greater savings."

Given the similar outcomes, the researchers concluded that Colorado's ACO model—which was implemented with fewer federal dollars—could be "a promising delivery system reform" that might be easier than Oregon's program for "other states to adopt." They wrote that the Colorado Medicaid ACO's  "focus on manageable, incremental steps has been followed by growth in enrollment, reductions in utilization, and improvement in some key performance indicators" without the same level of investment as Oregon's ACO (Japsen, Forbes, 2/13; Whitman, Modern Healthcare, 2/13; McWilliams et al., JAMA Internal Medicine, 2/13; McConnell et. al, JAMA Internal Medicine, 2/13).

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