Not only do physician-group accountable care organizations (ACOs) save Medicare more money than hospital-integrated ACOs, but the savings of physician ACOs grew substantially over 3 years.
Physician-group accountable care organizations (ACOs) are not only more likely than hospital-integrated ACOs to be associated with savings in the Medicare Shared Savings Program (MSSP), but their savings grew over 3 years, according to research published in The New England Journal of Medicine (NEJM).
Past research has shown that physician-led ACOs are more successful. The 2016 MSSP results found that 45% of physician-only ACOs earned shared savings; only 23% of ACOs that included a hospital earned shared savings, wrote Travis Broome of Aledade in 2017. However, there was little research on how savings achieved by ACOs early in the program grew over the years.
"ACOs that are large health systems or parts of organizations spanning many settings, specialties, and services have weaker incentives to lower spending than organizations that provide a narrower scope of services," the authors explained. "If an ACO reduces its provision of services, the resulting shared-savings bonus is at least partially offset by the forgone fee-for-service profits."
In comparison, physician ACOs have stronger incentives to lower spending—reducing unnecessary hospitalizations do not cause them to lose revenue, for example.
The researchers, which include The American Journal of Managed Care®’s co-editor-in-chief Michael E. Chernew, PhD, used fee-for-service Medicare claims from 2009 to 2015 to compare changes in Medicare spending for patients in ACOs both before and after they joined MSSP with changes in spending for a control group of patients being treated by providers who were not in MSSP. They estimated difference in the change from the pre-entry period for ACOs entering the program in 2012, 2013, or 2014.
The authors found that physician-group ACOs had greater reductions than hospital-integrated ACOs. In addition, these reductions grew the longer the ACO participated in the program. The differential change in spending in 2015 per beneficiary was —$474 for the 2012 cohort of physician-group ACOs, –$342 for the 2013 cohort, and –$156 for the 2014 cohort. In comparison, the changes for hospital-integrated ACOs was –$169 for the 2012 cohort, –$18 for the 2013 cohort, and $88 for the 2014 cohort.
After accounting for shared-savings payments, the researchers found that the physician-group ACOs saved Medicare a net $256.4 million in 2015. In comparison, bonus payments to hospital ACOs offset spending reductions.
Furthermore, the authors noted that policy changes to MSSP that requires ACOs to assume downside risk on a faster timeline could erode benefits of MSSP participation.
“Our results also suggest that shared-savings contracts that do not impose a downside risk of financial losses for spending above benchmarks—which may appeal to smaller organizations without sufficient reserves to withstand potential losses—may be effective in lowering Medicare spending,” the authors wrote.
McWilliams JM, Hatfield LA, Landon BE, Hamed P, Chernew ME. Medicare spending after 3 years of the Medicare Shared Savings Program. New Engl J Med. 2018;379(12):1139-1149. doi: 10.1056/NEJMsa1803388.