Spending Patterns Among Medicare ACOs That Have Reduced Costs

Area of Science:

• Health Economics
• Healthcare Management
• Public Health Policy

Background:

• Accountable Care Organizations (ACOs) aim to reduce healthcare spending while maintaining quality of care.
• The Medicare Shared Savings Program (MSSP) incentivizes ACOs to achieve cost savings.
• Understanding cost drivers is crucial for optimizing ACO performance.

Purpose of the Study:

• To identify specific cost categories disproportionately affected by ACOs achieving overall spending reductions.
• To compare spending patterns between low-cost and high-cost ACOs within the MSSP.
• To determine if spending reductions were driven by decreased utilization or cost per service.

Main Methods:

• Cross-sectional study design using financial data from the Centers for Medicare & Medicaid Services (CMS).
• Analysis of ACOs launched between 2012 and 2015.
• Linear regressions to assess the impact of admission volume versus cost per admission on inpatient and SNF spending.

Main Results:

• ACOs reducing per capita spending showed significant decreases in inpatient, hospice, and SNF costs.
• Reductions in SNF and inpatient spending were primarily due to fewer admissions, not lower costs per admission.
• In 2015, highest-cost ACOs spent over double per beneficiary compared to lowest-cost ACOs, with different proportional spending on outpatient and physician services.

Conclusions:

• Initial success in reducing healthcare costs within the MSSP is driven by decreased inpatient utilization.
• Significant spending variations exist between high- and low-cost ACOs.
• Further research is needed to identify interventions enabling high-performing ACOs to achieve cost reductions.