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Changes in Specialty Care Use and Leakage in Medicare Accountable Care Organizations
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Changes in Specialty Care Use and Leakage in Medicare Accountable Care Organizations

Michael L. Barnett, MD, MS, and J. Michael McWilliams, MD, PhD
Reducing specialty leakage is promoted as crucial for accountable care organizations (ACOs). This study finds that Medicare ACOs had modest reductions in specialty use and minimal changes in leakage.

In this study of ACOs in the MSSP, leakage of outpatient specialty care decreased slightly in specialty-oriented ACOs over the 2010-2014 period. These small reductions began prior to MSSP entry, however, suggesting that efforts to internalize specialty referrals may have been initiated to increase FFS revenue rather than to better coordinate care in response to ACO contract incentives, although we could not rule out anticipatory positioning by providers expecting to enter the MSSP. Lower rates of leakage could have also been due to expanding specialty capacity among organizations entering the MSSP.36 Regardless of their cause, the reductions were minimal, particularly during years of MSSP participation, suggesting limited effectiveness of efforts to contain specialty care within ACOs.

For specialty-oriented ACOs, this study found somewhat higher levels of leakage than did prior research in which the data accounted for organizations’ specialty practices that were not included as participants in ACO contracts.27 We would not expect this source of overestimation of leakage in our analysis to change over time, however, and we would expect that efforts by specialty-oriented ACOs to reduce leakage would result in greater proportions of specialty care provided by participating specialty practices. Thus, although our analysis may not accurately measure levels of leakage, it should support conclusions about the trends in leakage over time.

For primary care–oriented ACOs, which  by definition leak all or almost all specialty care, MSSP participation was consistently associated with decreases in use of specialist visits. These reductions ranged from small and statistically insignificant to as large as 5% by 2014 for new specialist visits for patients of the earliest MSSP entrants. In contrast, MSSP participation was not associated with changes in total use of specialist visits or rates of new specialist visits for patients in ACOs with more specialists. These findings are consistent with the stronger incentives that primary care groups have to reduce use of specialty care. They are also consistent with expectations that the effects of ACO efforts to curb use would be greater for new specialist visits than for established care with specialists. The greater reductions in specialist visit use among primary care–oriented ACOs challenge the notion that providing the full spectrum of care and containing leakage are keys to achieving more efficient care.

We also found that contract penetration was much lower for specialty-oriented ACOs than for primary care–oriented ACOs and did not change with exposure to ACO incentives. In isolation, reducing leakage should increase the proportion of ACOs’ outpatient revenue devoted to attributed patients, but the decreases in leakage were likely too small to have a measurable impact on contract penetration. The much lower contract penetration among specialty-oriented ACOs makes for much weaker incentives to implement system changes that affect all patients served, particularly when ACO contracts are not established with all payers.27,28 A lack of such systemic strategies may have contributed to the minimal reductions in specialist visits observed among more specialty-oriented ACOs, although we could not observe specific strategies taken by ACOs. Examples of systemic strategies that ACOs might pursue to limit specialty referrals include physician profiling with feedback on referral patterns, training PCPs to accommodate more of patients’ needs without referral, decision support systems requiring justification for referrals, and creating eConsult systems to obviate the need for some referrals.

For specialty-oriented organizations with a Medicare ACO contract but no or few commercial ACO contracts, serious investment in such strategies would not be financially attractive because they could substantially erode FFS revenue from specialty care for non-ACO commercially insured patients, whereas primary care–oriented organizations would not incur losses from such spillover effects.28,37 Even when specialty-oriented organizations risk contract with all payers, their low contract penetration means they would still have weak incentives to implement changes that would systematically reduce the intensity of specialty care for patients referred by other providers. The lack of change in contract penetration suggests that weak incentives for systemic reductions in specialty services may be an intractable feature of many specialty-oriented organizations, the most specialty-heavy of which provide more than half of their outpatient care in Medicare to non-ACO patients, our findings suggest.

Finally, we found that ACO efforts to engage patients in ACO objectives (eg, through care management programs) have not been associated with more stable attribution of beneficiaries to ACOs. Thus, churn in ACOs’ attributed population—with nearly 25% of an ACO’s attributed patients entering or exiting in a given year—continues to diminish possible returns from patient-specific investments, such as improving blood pressure control, teaching self-management of glycemic control, or correcting inappropriately costly care-seeking behavior.


Our study has several limitations. First, we were unable to assess the clinical appropriateness of specialty visits from claims data. However, the primary diagnoses associated with new specialist visits included many conditions that could be managed without the involvement of a specialist.

Second, our analyses of leakage, contract penetration, and stability of attribution do not support causal inferences about the effects of the MSSP because they were limited to ACOs. Nevertheless, trends in these measures are important because they characterize the direction in which ACOs’ incentives and provision of specialty care are moving.

Third, because the ACO programs are voluntary, participating providers might differ from other providers in ways related to trends in specialty care, thereby offering alternative explanations for findings from our DID analyses that are unrelated to MSSP incentives. However, trends in specialist visit use differed minimally between ACO-attributed beneficiaries and the control group in the precontract period.


Our study has important implications for ACO policy in Medicare and delivery system transformation more generally. First, the Medicare ACO model—in which attributed patients have unrestricted choice of providers—likely needs additional features to support patient engagement and control over where patients receive care,38 such as Medigap plans with networks focused on ACO providers and higher co-pays for non-ACO providers.39 Fostering patient engagement with a specific ACO may also require a mechanism to share ACO savings with patients.40

Second, our findings suggest that continued provider consolidation into larger multispecialty organizations may need to be slowed or reversed to better align incentives under ACO models with system changes by providers. The wide gulf in contract penetration between primary care–oriented and specialty-oriented ACOs suggests that efforts to engage patients and limit leakage would need to have an enormous impact on care patterns to achieve the same change in incentives as a change in organizational structure.

Many strategies that have been promoted as keys to ACO success take the structure of the delivery system as a given, whereas reorganization of the delivery system may be necessary to achieve the goals of ACO-like payment models. A need to redesign the delivery system to support new payment models may not be surprising given that the structure of the current delivery system has evolved in response to FFS payment.

Author Affiliations: Department of Health Policy and Management, Harvard T.H. Chan School of Public Health (MLB), Boston, MA; Department of Health Care Policy, Harvard Medical School (JMM), Boston, MA; Division of General Internal Medicine and Primary Care, Department of Medicine, Brigham and Women’s Hospital (MLB, JMM), Boston, MA.

Source of Funding: Supported by grants from the National Institute on Aging of the National Institutes of Health (P01 AG032952) and from the Laura and John Arnold Foundation.

Author Disclosures: Dr McWilliams reports consulting for Abt Associates on evaluation of ACO Investment Model. Dr Barnett reports no relationship or financial interest with any entity that would pose a conflict of interest with the subject matter of this article.

Authorship Information: Concept and design (MLB, JMM); acquisition of data (MLB, JMM); analysis and interpretation of data (MLB, JMM); drafting of the manuscript (MLB, JMM); critical revision of the manuscript for important intellectual content (MLB, JMM); statistical analysis (MLB, JMM); obtaining funding (JMM); administrative, technical, or logistic support (MLB, JMM); and supervision (JMM).

Address Correspondence to: Michael L. Barnett, MD, Department of Health Care Policy and Management, Harvard T.H. Chan School of Public Health, 677 Huntington Ave, Kresge 411, Boston, MA 02115. Email:

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