Early Performance of Accountable Care Organizations in Medicare

Abstract

Background: In the Medicare Shared Savings Program (MSSP), accountable care organizations (ACOs) have financial incentives to lower spending and improve quality. We used quasi-experimental methods to assess the early performance of MSSP ACOs.

Methods: Using Medicare claims from 2009 through 2013 and a difference-in-differences design, we compared changes in spending and in performance on quality measures from before the start of ACO contracts to after the start of the contracts between beneficiaries served by the 220 ACOs entering the MSSP in mid-2012 (2012 ACO cohort) or January 2013 (2013 ACO cohort) and those served by non-ACO providers (control group), with adjustment for geographic area and beneficiary characteristics. We analyzed the 2012 and 2013 ACO cohorts separately because entry time could reflect the capacity of an ACO to achieve savings. We compared ACO savings according to organizational structure, baseline spending, and concurrent ACO contracting with commercial insurers.

Results: Adjusted Medicare spending and spending trends were similar in the ACO cohorts and the control group during the precontract period. In 2013, the differential change (i.e., the between-group difference in the change from the precontract period) in total adjusted annual spending was -$144 per beneficiary in the 2012 ACO cohort as compared with the control group (P=0.02), consistent with a 1.4% savings, but only -$3 per beneficiary in the 2013 ACO cohort as compared with the control group (P=0.96). Estimated savings were consistently greater in independent primary care groups than in hospital-integrated groups among 2012 and 2013 MSSP entrants (P=0.005 for interaction). MSSP contracts were associated with improved performance on some quality measures and unchanged performance on others.

Conclusions: The first full year of MSSP contracts was associated with early reductions in Medicare spending among 2012 entrants but not among 2013 entrants. Savings were greater in independent primary care groups than in hospital-integrated groups.

Figure 1. Differential Changes in Total Medicare Spending in 2013 According to Accountable Care Organization (ACO) Subgroup

Differential changes (i.e., between-group differences in the change from the pre-ACO contract period) in total Medicare spending per beneficiary in 2013 are displayed according to ACO subgroup, with negative estimates indicating estimated savings. Subgroup estimates are provided separately for the 2012 (blue) and 2013 (red) cohorts of Medicare Shared Savings Program (MSSP) ACOs. Estimated savings in the 2012 cohort were greater for ACOs in high-spending areas than for those in low-spending areas, but the subgroup difference was not significant (P = 0.09) and not interpretable because precontract spending growth in high-spending areas was already significantly slower in the ACO group than in the control group. All the 2008 ACO spending values were either above or below the local average. Of 220 MSSP ACOs, 33 (15%) entered a total of 45 commercial ACO contracts in 2012 or 2013 without having entered a commercial ACO contract before 2012.