ACOs save by shifting away from inpatient, post-acute care

The accountable care organizations (ACOs) that saved money through the Medicare Shared Savings Program (MSSP) spent less on care in inpatient or skilled nursing settings while increasing spending on care provided in physician offices, according to a study published in the American Journal of Accountable Care.

Led by David Muhlestein, PhD, chief research officer at Leavitt Partners, the study examined the public use files for MSSP ACOs from 2013 to 2016, analyzing whether the organizations were changing expenditure patterns over time. Overall, per capita expenditures grew by 1.3 percent annually over the study period, from $10,351 in 2013 to $10,745 in 2016.

Only one category, however, saw an increase in expenditures over that time: physician services. Spending on inpatient, home health and hospice care remained relatively flat, while less was spent on skilled nursing facilities (SNF), ambulatory service and durable medical equipment.

For the ACOs that saved money, Muhlestein found an association between decreasing certain expenditures and increasing their savings rate. If inpatient spending went down by 1 percent, the savings rate went up by 0.46 percent. If SNF spending went down by 1 percent, the savings rate increased by 0.82 percent.

“This finding indicates that the degree to which ACOs shift their expenditures matters and that significant additional savings can be gained by shifting inpatient and SNF spending toward physician services,” Muhlestein and his coauthors wrote. “Our findings are consistent with the argument that some services may provide more value, leading to reductions in the cost of delivering healthcare.”

What the study didn’t address is how or why ACOs are making this shift. The shifting expenditures haven’t resulted in reduced quality, however, according to a companion study also published in the March edition of AJAC.

Based on their results, Muhlestein and his coauthors wrote policymakers should “continue to develop programs that incentivize care coordination,” care transitions and prioritizing lower-cost, lower-acuity settings.

“New payment models, such as the alternative payment models encouraged under the Medicare Access and CHIP Reauthorization Act, represent an important avenue to incentive these changes,” they concluded. “Continuing to refine and adopt new payment models may enable faster changes in practice, including care management pathways that reduce hospital use.”