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Report: ACO Lowered Costs for Medicare Beneficiaries

August 28, 2013
by Gabriel Perna
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A recent research effort out of Massachusetts has determined that at least one accountable care organization (ACO) initiative was directly responsible for lower spending for Medicare patients.

The research, from J. Michael McWilliams, M.D., Ph.D., of Harvard Medical School, Boston and colleagues, examined whether the Blue Cross Blue Shield (BCBS) of Massachusetts' Alternative Quality Contract (AQC), an early commercial ACO initiative, was associated with changes in spending and quality for Medicare beneficiaries. Dr. McWilliams and company compared elderly Medicare beneficiaries in Massachusetts served by 11 provider organizations within the AQC (intervention group) vs. beneficiaries served by other providers (control group).

The researchers looked at total quarterly medical spending per beneficiary as well as five process measures of quality, potentially avoidable hospitalizations, and 30-day readmissions. The research appears in a recent issue of the Journal of the American Medical Association.

What they found was that in year two of the comparison, the spending difference between the AQC and non-AQC was a difference of 3.4 percent. This was explained by changes in spending on office visits, emergency department visits, minor procedures, imaging, and laboratory tests. In addition, annual rates of low-density lipoprotein cholesterol testing improved for beneficiaries with diabetes in the intervention group by 3.1 percentage points and for those with cardiovascular disease by 2.5 percentage points. However, mostly there were little differences in terms of quality.

"Our findings have several implications for payment and delivery system reforms. In general, cost-reducing spillover effects of ACO contracts with one insurer on care for other insurers' enrollees should signal a willingness among provider organizations generating the spillovers to enter similar contracts with additional insurers; they could be rewarded for the savings and quality improvements achieved for the other insurers' enrollees,” the authors write.

They go onto say that broad organizational responses to early ACO initiatives may “support a rapid transition among ACOs to global payment arrangements with multiple payers.” It also points to additional efforts to foster multipayer participation in this area, specifically within recent state initiatives and provisions in Pioneer Medicare ACO contracts, as potentially vital.

The Pioneer ACO initiative recently took a minor hit when the Centers for Medicare & Medicaid Services (CMS) announced that nine ACOs that did not produce savings in the first year of the Pioneer program will switch to another ACO model or will leave Medicare accountable care programs altogether.

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