By Stephanie Murg, Managing Director, G2 Intelligence
The first wave of accountable care organizations (ACOs) is positioned well to achieve the touted goal of “bending the cost curve,” according to a study published May 4 in the online edition of the Journal of the American Medical Association. When compared to general Medicare fee-for-service (FFS) beneficiaries, beneficiaries affiliated with Pioneer ACOs “exhibited smaller increases in total Medicare expenditures and differential reductions in utilization of different health services, with little difference in patient experience,” the study concluded.
Researchers from the Centers for Medicare & Medicaid Services (CMS) and the Centers for Medicare & Medicaid Innovation undertook a difference-in-differences approach to analyze data from the first two years of the Pioneer ACO model. Launched by CMS in 2012 as a test of population health management, this model “targets more experienced organizations with greater incentives for motivating the care transformation necessary to improve outcomes,” note the authors.
During the first two performance years, Pioneer ACOs’ total spending for their 1,481,970 affiliated beneficiaries increased approximately $385 million ($280 million in the first year, $105 million in the second) less than spending of similar FFS beneficiaries. The researchers attributed this to “decreases in inpatient utilization among ACO-aligned beneficiaries, although greater decreases in primary care evaluation and management office visits, and smaller increases in the use of tests, procedures, and imaging services, also were related to the observed differential changes in spending.”
In an accompanying editorial, Lawrence P. Casalino, M.D., Ph.D., professor of healthcare policy and research at Weill Cornell Medical College, points out that the first-year savings of $280 million represents a reduction of 4 percent. “This amount may seem small,” he notes, “but if this rate of savings could be sustained, and achieved throughout a large part of the U.S. health care system, it would be more than enough to ‘bend the cost curve’ so that health care expenditures do not continue to increase as a percentage of the gross domestic product and the federal budget.”
For Mark McClellan, M.D., Ph.D., senior fellow and director of the Health Care Innovation and Value Initiative at the Brookings Institution, who also penned an accompanying editorial, the study indicates real progress and highlights the need for ongoing analysis. “This early evidence moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined,” writes McClellan. “Payment reform moving away from FFS is now part of the policy landscape, but the exact form it will take is less clear.”
For information about the laboratory’s role in ACOs, see G2 Intelligence’s report Laboratory Services in Accountable Care Organizations.