Aug. 29—Participating in an accountable care organization (ACO) may spur providers to decrease healthcare costs for all of their patients, but not necessarily deliver higher-quality care, according to new research.

Eleven provider organizations participating in an early ACO in Massachusetts sharply cut their per-beneficiary spending on Medicare patients as well, according to research published in the Aug. 28 issue of JAMA.

The difference in average provider spending between patients in the Blue Cross and Blue Shield of Massachusetts Alternative Quality Contract (AQC) and Medicare beneficiaries dropped from $150 to $51 after two years, "constituting a significant change," wrote the study authors. The savings were primarily derived from reduced outpatient spending on procedures, imaging and tests.

"These findings suggest that global payment incentives in the AQC elicited responses from participating organizations that extended beyond targeted case management of BCBS enrollees," the authors concluded.

Analyzing the Study’s Findings

James Landman, director, thought leadership initiatives for HFMA, said the study’s findings are consistent with what HFMA has found in its Value Project research. 

"Changes in care delivery and cost efficiency for one group of patients typically spread quickly to other patients as well," Landman said. "As changes in care delivery take hold, and their effectiveness is established, it will be critical for all payers to put payment structures supporting value-based care into place to ensure the financial sustainability of new care delivery patterns."

However, the study found less spillover benefits to health quality for Medicare patients of the ACO providers. There was no improvement for most health measures that the study tracked, but health outcomes improved on two cholesterol testing measures.

J. Michael McWilliams, M.D., Ph.D., assistant professor of healthcare policy at Harvard Medical School, Boston, and one of the study’s authors, said in an interview that he was not surprised that more of the spillover savings did not come from inpatient settings because the underlying AQC project similarly derived most of it savings from outpatient settings.

Among the explanations included in the study for the lack of inpatient savings was the lack of improvement in hospitalizations that might have been prevented by better disease symptom management.

Lack of Spillover in Quality Improvement

The authors attributed the spillover health savings effects to the adoption of organizationwide policies by many ACO-participating providers, such as changed referral practices and undertaking high-risk case management across multiple payers.

But the lack of a similar spillover of quality improvement was surprising, David Muhlestein, director of research at Leavitt Partners, said in an interview, because his organization has found such carryover quality in most ACO providers it has studied.

Supporters of the Affordable Care Act have touted the limited number of Medicare ACOs authorized by the law as a way to spur care delivery transformation throughout the healthcare system. Advocates believe widespread adoption of ACO-like quality-based payments would reduce the rise of healthcare inflation and improve comparatively low U.S. health outcomes.

However, Muhlestein cautioned that the spillover savings identified in the Massachusetts study are less likely to occur with Medicare ACOs because more of them are smaller physician-led organizations than the large health systems in the study.

"If you have a large academic medical center that says, 'We’re going to become an ACO and that’s going to be everything we do,' that’s going to have more potential to have a spillover effect than these small, tiny physician groups," Muhlstein said. 


Rich Daly is a senior writer/editor, in HFMA’s Washington, D.C., office. Follow Rich on Twitter @rdalyhealthcare.

Publication Date: Thursday, August 29, 2013