By Timothy Ferris, MD, MPH, Partners Senior Vice President for Population Health

Hundreds of health care organizations across the country are experimenting with the accountable care organization (ACO) concept, trying to both improve patient care and lower the cost of that care. A recent publication in the New England Journal of Medicine analyzed the results so far and reached the disappointing conclusion that ACOs in the Medicare Shared Savings Program (MSSP) saved little after the first full year.

In the study, researchers used Medicare claims from 2009 to 2013 to compare changes in spending and quality measure performance from before the start of the ACO contracts to the end of the first year for patients served by the 220 ACOs across the country. They compared these results to a control group of non-ACO providers, adjusting for differences in geography and patient characteristics. ACOs that joined in 2012 had a $144 per patient savings – or stated another way saved 1.4% ($238 million). Estimated savings were consistently greater in independent primary care groups than hospital-integrated groups. Three areas contributed the most to spending reductions: post acute care at skilled nursing facilities (6.1%), home health care (2.7%), and inpatient care (1.4%). There also were major improvements on many well-accepted quality measures.

If the 1.4% savings trend holds, that difference will allow costs to continually decrease

Some commentators have viewed the 1.4% savings as a failure of ACOs to achieve significant savings, but when viewed through the lens of bending the cost curve in the long-run, the 1.4% is quite a significant achievement. Think about this: through a voluntary program thousands of U.S. physicians and hundreds of health care organizations have set their sights on helping the US find its way out of the cost conundrum. What appears as a small decrease actually represents half of the difference between medical cost inflation and general inflation.

Although the findings were specific to year one, it is important to note that it takes time to accrue savings, especially after making upfront investments to implement these new programs. At the Massachusetts General Physicians Organization, we learned this with our CMS Demonstration Project, which was focused on caring for high-risk patients. Over the course of 6 years, we earned 7.1% net savings and approximately 4% annual savings for the total population, but it took time and required a significant investment.

If the 1.4% savings trend holds, that difference will allow costs to continually decrease (albeit slowly) even as general inflation marches along. From this perspective, these voluntary ACOs have hit a home run. And it’s a glass that is more than half full.

About ACOs:

ACOs typically conduct usual fee-for-service billing practices, but also agree to an annual total medical expense spending target for an assigned population of patients. An annual reconciliation results in either penalties for exceeding targets or shared savings if spending remains below targets. The reconciliation incorporates a small number of commonly used primary care measures. Partners HealthCare became a Pioneer ACO in 2012 and to date has saved $39.2 million dollars ($18.8 million to Medicare as part of the Shared Savings Program and $20.4 million to Partners HealthCare).

Topics: Affordability, Patient Experience, Medicare/Medicaid

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