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Medicare, Medicaid ACO Models Show Gains Increase Over Time

Two new studies show that although gains from Accountable Care Organizations (ACOs) are moderate, they increase with time and come from diverse versions of ACOs.

By Marcia Frellick

Two new studies show that although gains from Accountable Care Organizations (ACOs) are moderate, they increase with time and come from diverse versions of ACOs.

In the first study, J. Michael McWilliams, MD, PhD, of the Department of Health Care Policy at Harvard Medical School, Boston, Massachusetts, and colleagues used fee-for-service Medicare claims from a random 20% sample of beneficiaries to compare beneficiaries in ACOs and those in non-ACOs before and after they entered the Medicare Shared Savings Program.

The 20% sample included more than 8.3 million hospital admissions and more than 1.5 million stays in skilled nursing facilities (SNFs).

They found that from 2012 to 2014, the 114 ACOs yielded a 9% reduction in post-acute spending, or $106 less per beneficiary, compared with the non-ACO control group (95% confidence interval [CI], -$176 to -$35). The decline was driven by more patients going home instead of to a facility and by reductions in the length of facility stays and in acute inpatient care.

Moreover, the cost reductions grew over time and were most concentrated in care in SNFs. Excessive use of post-acute SNF care is often targeted as a source of wasteful spending.

"SNFs are the facilities with the strongest incentive to keep patients as long as possible because they are paid on a per diem basis," Dr. McWilliams notes in an audio interview provided by the journal.

The investigators also found that independent physician groups did just as well or better than hospital-based ACOs in reducing costs. That may be surprising to those who believe only hospitals can affect post-acute care.

In an invited commentary, Carrie H. Colla, PhD, and Elliott S. Fisher, MD, MPH, of the Dartmouth Institute for Health Policy and Clinical Practice, Lebanon, New Hampshire, write that the study by Dr. McWilliams and colleagues suggests that improvements in post-acute care do not require financial integration between physician groups and hospitals across the continuum from outpatient to inpatient to post-acute care.

Although many believe the survival of independent practices is important, so far, economic incentives have favored consolidation.

One approach to increasing the viability of independent physician groups may be to equalize pay rates across care sites or to provide direct financial support for independent practices, they write.

Oregon vs Colorado: Different Models, Similar Results

The second study, by K. John McConnell, Ph.D., of the Center for Health Systems Effectiveness at Oregon Health and Science University in Portland, and colleagues compared early results of two very different Medicaid ACOs in Colorado and Oregon.

In 2011, Colorado started its Accountable Care Collaborative by creating seven regional care collaborative organizations that received funding on a per-member, per-month basis. The collaborative connected enrollees with community services, and there was no upside or downside financial risk for participating providers.

In 2012, Oregon, with a $1.9 billion investment from the federal government, created 16 coordinated care organizations. The groups were responsible for all patient care under a global budget, and the organizations took on full financial risk.

The authors found despite those differences in structure, reductions in spending were similar in both states.

"ACOs Are Working"

Dr. McWilliams notes that early findings of ACOs have shown only modest gains and that that has caused many to discount the model.

"We really shouldn't have expected immediate success," he said in the audio interview.

But his group's findings show that savings grow over time, and they seem to be most pronounced where the incentives to save are stronger.

"I don't think we should pack up our bags and declare victory and go home over 9%, but I think the point is we shouldn't dismiss it either," he said.

"We now know ACOs are working, so let's not abandon that direction or weaken the incentives in it."

Policy Implications

Dr. Colla and Dr. Fisher agree that these studies show that although the gains from ACOs are modest, savings increase over time.

Dr. Colla said in the audio interview that given Dr. McWilliams' research, which found similar success whether ACOs were physician-based or were affiliated with large hospital systems, it would behoove policymakers guiding the transition to value-based care to allow diverse options in creating ACOs.

Dr. McConnell's research shows the need for allowing diversity in the types of contracts and in how much risk the provider groups are taking on, given that the models in Colorado and Oregon showed similar results.

The Colorado model shows that strong incentives may not be necessary to induce changes in the behaviors of providers, Dr. Colla said. It showed similar results to Oregon's overall risk model by improving value through coaching providers, connecting members with nonmedical services, and giving feedback on costs, use of the programs, and outcomes.

Dr. Colla and Dr. Fisher note that although these studies and others show modest cost reductions in ACO models, little is known about how they affect health and quality of life.

"A long-term commitment to alternative payment model evaluation is necessary to ensure effective, sustainable payment and delivery system reform," they conclude.

The study by Dr. McConnell et al was funded by the National Institutes of Health and the Silver Family Foundation. The authors have disclosed no relevant financial relationships. The study by Dr. McWilliams et al was funded by grants from the Laura and John Arnold Foundation and the National Institute on Aging of the National Institutes of Health. Dr. McWilliams served as an expert witness for the Federal Trade Commission and serves as a consultant to Abt Associates for an evaluation of the ACO Investment Model. A coauthor serves on the scientific advisory board for NaviHealth. Dr. Fisher receives personal fees from a number of organizations and institutions, which are listed in the original article. He is an unpaid member of the board of directors of the Institute for Healthcare Improvement and the Fannie E. Rippel Foundation.