ACOs vs. FFS: Spending, Utilization and Patient Experience

In 2012, the Centers for Medicare & Medicaid Services (CMS) launched the Pioneer Accountable Care Organization (ACO) Model and the Medicare Shared Savings Program (MSSP) as alternative payment approaches to engage physicians and healthcare organizations willing to assume collective responsibility for the cost and quality outcomes of a specified population of fee-for-service (FFS) Medicare beneficiaries. MSSP is a permanent program. The Pioneer ACO Model is one of several tests of ACOs' ability to improve quality of care and reduce U.S. healthcare spending.

This study examined whether FFS beneficiaries cared for by physicians participating in Pioneer ACOs had smaller increases in spending and utilization than other FFS beneficiaries while retaining similar levels of care satisfaction in the first 2 years of the Pioneer ACO Model. Results showed that in 2012 and 2013, increases in total spending were less for beneficiaries aligned with Pioneer ACOs than for comparison populations (Chart 1). Compared with other Medicare beneficiaries, ACO-aligned beneficiaries reported higher mean scores for timely care and clinician communication (Chart 2). 

Analysis

The lion’s share of the per-beneficiary-per-month growth reduction came through reductions in hospital utilization (50%), with a smaller share coming from reductions in physician services utilization (25%). It’s interesting to note the smaller savings (reduction in growth) in year two compared with year one. Is it possible that the year-one savings were the “low-hanging fruit” and therefore easier to achieve? With year-two savings less than half of year-one savings, it would be interesting to carry out this analysis in subsequent years to determine the opportunity for sustainable savings over time. Still, the authors estimate the Pioneer ACOs generated $280 million in expenditure savings and, if that is sustainable, the ACO model may in fact be able to bend the cost curve.

Also of note, Pioneer ACO beneficiaries rated their experience of care—including timeliness and ease of obtaining care, access to specialists and clinician communication—at least as high as beneficiaries in the FFS and Medicare Advantage programs. This suggests that providers, given the right incentives, can simultaneously achieve at least two of the IHI’s Triple Aim goals.

However, of the original 32 Pioneer ACOs, 13 have left the program, switching to either the MSSP or some other configuration of shared-risk arrangements. One of the most mentioned reasons for leaving the Pioneer model was the downside risk—payment of penalties for failing to achieve savings. Two others are the complexity of the program and the “churn” (providers, and in some cases patients, returning for more services than are typically needed to achieve the outcome) and “leakage” (when members seek services from non-ACO providers, who often are less able to engage in care coordination).  For the ACO model to be sustainable over time, health system leaders and regulators must simplify the structure, performance and quality measures for participants while enhancing the incentives to achieve the desired goals. 

Journal Source

Nyweide D, Lee W, Cuerdon T, Pham H, Cox M, Rajkumar R, Conway P. Association of Pioneer Accountable Care Organizations vs Traditional Medicare Fee for Service With Spending, Utilization, and Patient Experience. JAMA. Published online May 04, 2015.