Spending variation among ACOs in the Medicare Shared Savings Program.

Area of Science:

• Health economics
• Healthcare management
• Health services research

Background:

• Understanding healthcare spending variation across organizations, not just geography, is crucial as care delivery and interventions increasingly target organizations.
• Accountable Care Organizations (ACOs) are key targets for study due to their financial incentives to reduce healthcare spending.
• Analyzing spending disparities among ACOs can reveal opportunities for cost containment.

Purpose of the Study:

• To analyze spending variations across Accountable Care Organizations (ACOs).
• To identify specific service categories and clinical conditions contributing to spending differences among ACOs.
• To estimate potential cost savings achievable by reducing spending disparities.

Main Methods:

• Cross-sectional analysis of Medicare claims data.
• Stratified ACOs into quartiles based on risk-adjusted spending relative to market averages.
• Compared spending between top and bottom quartiles across service categories and clinical conditions.

Main Results:

• In 2016, the highest-spending quartile of ACOs exhibited 14% higher per-beneficiary spending than the lowest quartile.
• Greatest spending variation (27%) was observed in skilled nursing facilities, despite ACOs having reduced spending most in this area.
• Inpatient care represented the largest absolute driver of spending differences (37%).

Conclusions:

• Significant opportunities for healthcare cost savings exist within and across ACO markets.
• Reducing spending variations among ACOs can lead to substantial financial benefits.
• Focusing on organizational-level spending analysis is vital for healthcare cost reduction strategies.