Accountable Care Organizations: Study Evaluates a Key Medicare Cost & Quality Program

Accountable care organizations seek to improve the care received by traditional Medicare patients while holding cost growth down, but a new study raises questions about its success.

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Author | Kara Gavin

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As the Medicare system seeks to improve the care of older adults while also keeping costs from growing too fast, a new study suggests that one major effort may not be having as much of an impact as hoped.

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A new analysis of data from the Medicare Shared Savings Program (MSSP) finds that high-cost physicians and high-cost patients dropping out of the program accounted for much of the savings reported from 2008 to 2014.

After the effects of those departures were taken into account, the Accountable Care Organizations (ACOs) taking part in the MSSP had the same costs as physicians in their area who were not taking part in ACOs, but also took care of other patients with traditional Medicare coverage.

In 2014, the 338 MSSP ACO's across the country involved nearly 5 million Baby Boomers and older adults who received their health care from thousands of providers. Today, that number has increased to 518 ACOs covering nearly 11 million people.

The study also compares ACO and non-ACO providers on measures of health care quality, finding that patients in a MSSP ACO were not more likely to be given four proven tests for common health problems than similar patients with the same kind of Medicare coverage who were not part of an ACO.

The study, by a University of Michigan team, is published in the Annals of Internal Medicine. The authors note that the results have greater implications for providers who voluntarily join an ACO, rather than physicians employed by large group practices that have engaged in Medicare cost and quality efforts for many years -- such as those at Michigan Medicine, U-M's academic medical center.

The findings suggest that as the federal government continues its effort to "bend the cost curve" for Medicare through voluntary reforms, it should take into consideration year-to-year shifts in which providers and patients are taking part in ACOs. Otherwise, the researchers say, "selection bias" could skew the interpretation of the program's effects.

ACOs can earn extra dollars from Medicare based on their overall costs and quality averaged across all of their providers' patients, or can lose money if they do not meet cost or quality goals. The Centers for Medicare and Medicaid Services has set a goal of increasing the disincentives or "risk" that ACOs face, so that an accurate measurement of the actual cost and quality performance will increase in importance, say the researchers behind the new study.

To our surprise, we found that ACO savings may be driven by the disproportionate exit of higher-spending clinicians out of ACOs.
Adam Markovitz, Ph.D.

"Our results suggest that there is less reason for optimism about the MSSP's effects to date than might have been suggested by other studies," says Andy Ryan, Ph.D., senior author of the  study and a professor at the U-M School of Public Health. "We hope CMS will consider the implications as it moves forward with evaluating programs aimed at improving the long-term sustainability of the Medicare system."

Ryan worked with Adam Markovitz, Ph.D., who led the analysis as part of his doctoral degree in public health. He is now completing his medical degree at the U-M Medical School as part of the Medical Scientist Training Program.

"At the project's outset, we hypothesized that early savings in this voluntary ACO program were driven by disproportionate entry of high-performing "early adopter" clinicians into ACOs," says Markovitz. "To our surprise, we found that ACO savings may be driven by the disproportionate exit of higher-spending clinicians out of ACOs."

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In all, the ACO providers whose overall costs were in the top one percent of all providers studied were more than twice as likely to leave a MSSP ACO than providers whose costs fell into the middle level of spending.

Whether these providers were encouraged to leave the ACO because of their costs, or they left voluntarily because they were unable or unwilling to reduce the growth in cost of their patients' care, cannot be determined through the current study.

MSSP ACO administrators are able to see the costs attributed to each of the providers taking part in their ACO, so "gaming" of which providers to include could be happening, say Ryan and Markovitz. "We would hope that if a provider shows a trend toward low-value care, the ACO would work with them to remedy the situation," says Ryan.

Markovitz, Ryan and colleagues published a paper in Health Affairs earlier this year showing that high-cost patients were slightly more likely to leave ACOs than lower-cost ones. They noted in that study that the MSSP program did not adjust ACOs' payments depending on how much more ill their participating patients became over time – the payment was based on how sick each patient was when their provider first joined the ACO.

While this has apparently kept ACOs from "up-coding" patients to game the system, it also means that ACOs may have an incentive to drop providers whose patients become more severely ill – and therefore costlier.

That study, and this new study, have implications for the changes being proposed for MSSP and other value-based payment programs in Medicare.

"There need to be more safeguards against the selective attrition of patients and providers from ACOs that we've observed in our studies," says Ryan. "As CMS encourages more provider risk-taking, it should design its systems to support what's working best to improve care and efficiency."

Markovitz also notes that CMS could design more future Medicare innovations as true experiments – for instance, with randomization (as in Medicare's bundled payment plan for joint replacement surgery) or a phased roll-out that allows researchers to evaluate more readily whether a program truly saved money or improved quality.

Paper cited: Adam A. Markovitz, BS; Andrew M. Ryan, PhD, et al. "Performance in the Medicare Shared Savings Program After Accounting for Nonrandom Exit: An Instrumental Variable Analysis" Annals of Internal Medicine. DOI: 10.7326/M18-2539

In addition to Markovitz and Ryan, the paper's authors include John M. Hollingsworth, MD, MS; John Z. Ayanian, MD, MPP; Edward C. Norton, PhD; and Phyllis L. Yan, MS. Ayanian directs, and Hollingsworth, Norton and Ryan are members of the U-M Institute for Healthcare Policy and Innovation. Markovitz received research support from the Horowitz Foundation for Social Policy and the Agency for Healthcare Research and Quality.

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