Physician-led ACOs save more money than hospitals
Accountable care organizations saved the Medicare program $314 million last year, but physician-group organizations are the leaders in savings.
Compared to hospital-led ACOs, physician-led groups were much more likely to have generated savings over a three-year period in a study published in The New England Journal of Medicine.
“In this study, we found that participation in the MSSP (Medicare Shared Savings Program) by physician groups was associated with savings for Medicare that grew over the study period, whereas hospital-integrated ACOs did not produce savings (on average) during the same period,” study author J. Michael McWilliams, MD, PhD, wrote. McWilliams is a professor of medicine at Harvard Medical School.
Physician-led ACOs tended to do better over time and had savings that were “significantly greater” than spending reductions in hospital-integrated ACOs, according to the study. ACOs, which were first established as part of the MSSP in 2012, cover roughly one-third of the fee-for-service (FFS) Medicare population.
The study looked at FFS Medicare claims from 2009 through 2015, comparing changes in spending for patients in ACOs before and after entry into the MSSP versus patients not in the program. Spending differences were estimated for hospital-integrated ACOs and physician-group ACOs that entered the program in 2012, 2013 and 2014.
The findings come at a time when ACOs are facing new challenges from the Trump administration. CMS Administrator Seema Verma criticized ACOs for participating in upside-only models, taking part in shared savings but nothing having any financial downside. The agency recently proposed to revamp the ACO program, forcing organizations to take two-sided risk within two years of entering the MSSP. The move could drive out more than 100 ACOs from the voluntary program, according to CMS’s own estimates.
According to the NEJM study, the new policy could undermine several of the MSSP’s benefits.
“Our findings suggest distinctive benefits from MSSP participation that could erode if policy changes, such as requiring ACOs to assume downside risk after fewer years of participation, cause ACOs to leave the program,” the study reads.
The study found that larger ACOs that cover more services have fewer incentives to provide bigger savings.
“The strength of incentives differs for ACOs with different organizational structures. 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 study reads.
Physician groups as ACOs have stronger incentives to limit utilization, such as reducing unnecessary hospitalization or outpatient hospital procedures and imaging for any patient, as they won’t lose any revenue by reducing those services.
Differential spending reductions of physician-group ACOs from 2012 to 2014 resulted in a net savings of $256.4 million in 2015, accounting for shared-savings bonus payments. Bonus payments more than offset aggregate spending reductions for hospital-integrated ACOs, the study determined. The study also determined that net savings to Medicare from ACOs was about 2.8 times higher than what CMS reported. Aggregate reduction in fee-for-service spending accrued by the ACOs in 2015 was $583.4 million, or 39 percent higher, in the study than reported by CMS.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."