Pioneer ACOs’ Medicare costs $385 million lower than fee-for-service model

Cost increases at Medicare’s Pioneer accountable care organizations were $385 million less than those of traditional fee-for-service Medicare in their first 2 years, without compromising patient satisfaction, a new study showed.

The Centers for Medicare & Medicaid Services launched the Pioneer ACOs in 2012 to control cost increases associated with a standard fee-for-service system that tends to favor better-compensated services.

Pioneer ACOs – which comprise established health care organizations opting to participate – also receive fee-for-service (FFS) payments, but they are encouraged to keep costs within limits by sharing both savings and risk if actual costs are lower or higher than projected. The goal is to encourage providers to direct more resources to services that may be less lucrative but are associated with better patient outcomes and patient experiences.

Research published online May 4 in JAMA (doi:10.1001/jama.2015.4930) compared spending for two populations of Medicare beneficiaries in 2012 and 2013: one associated with one of 32 Pioneer ACOs, and a larger group under standard FFS Medicare in the same markets, according to David J. Nyweide, Ph.D., of the Centers for Medicare & Medicaid Services, Baltimore, and his associates.

For 2012, the investigators found that cost increases were $35.62 lower per beneficiary per month for the Pioneer ACO patients, compared with patients living in the same markets but not affiliated with a Pioneer ACO – a total difference in 2012 of about $280 million overall.

In the second year of the study, 2013, the difference in costs increases dropped by two-thirds, to $11.18 per ACO beneficiary per month – about $105 million less in cost increases incurred by the Pioneer ACOs.

About half of the savings, Dr. Nyweide and his associates reported, came from smaller increases in inpatient care spending among the Pioneer-aligned Medicare patients ($14.40 less per patient per month in 2012 and $6.46 less in 2013), compared with FFS patients. There were, however, also differences in physician services ($8.29 less per ACO patient per month in 2012 and $2.69 less in 2013), along with smaller savings in tests, procedures, and imaging, compared with non–Pioneer-aligned Medicare beneficiaries.

Performance for Pioneer ACO populations was shown to be better in terms of patient-reported timely care and clinician communication, the investigators found. ACO performance was comparable to traditional fee-for-service and Medicare Advantage programs in ease of getting care and access to specialists.

Dr. Nyweide and his colleagues surmised that decreases in spending growth may have been greater in the first year as the ACOs focused first on management of high-cost patients, savings that may have been harder to sustain the following year. Physician turnover may have contributed to the lower savings seen in 2013, they acknowledged.

In addition, “since beneficiaries in the comparison group could still receive care from ACO-affiliated physicians, the practice patterns of those physicians may have affected the care of other Medicare patients,” more closely aligning costs between the study arms, the investigators wrote.

Although the results were encouraging, savings generated by ACOs “will have little effect on U.S. health care” unless a large number of ACOs enter the program, Dr. Lawrence P. Casalino of Cornell University, New York, noted in an editorial accompanying the study (JAMA 2015 May 4 [doi:10.1001/jama.2015.5086]).

Of the 32 original Pioneer ACOs, however, 13 have left the program, he noted, adding that many have opted to participate instead in the Medicare Shared Savings Program, which does not come with either the higher level of reward for keeping costs down or the risk of the Pioneer ACOs.

Medicare will have to create stronger incentives for ACOs, Dr. Casalino argued, which should be rewarded “not only for improving their own performance – a difficult task, year after year, for ACOs that already perform well – but also for improving compared with their region and with the nation as a whole.” And Medicare patients will require stronger incentives, such as waived copays, to keep their care within the ACO.

The new evidence “moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined,” wrote Dr. Mark McClellan of the Brookings Institution, Washington, in a separate editorial (JAMA 2015 May 4 [doi:10.1001/jama.2015.5087]). “Payment reform moving away from FFS is now part of the policy landscape, but the exact form it will take is less clear. Evaluations like this, derived from actual payment reforms, can provide more clarity.”

Nonetheless, “these early results may be viewed as modest,” cautioned Dr. McClellan, former administrator of the Centers for Medicare & Medicaid Services. “The smaller increase in spending amounted to 4% in year 1 and less than 1.5% in year 2. The estimates do not account for the shared-savings payments to the ACOs, which totaled $77 million in 2012. Nor do they account for the investments of time and money made by the health care organizations.”

The Centers for Medicare & Medicaid Services funded the study. Dr. Nyweide and his colleagues reported no conflicts of interest related to the study. Dr. Casalino reported receiving advisory fees on health care delivery and payment from the American Medical Association, part-time employment as an advisor to the Agency for Healthcare Research and Quality, and serving as coinvestigator and coauthor on articles with Dr. Nyweide not related to ACOs. Dr. McClellan disclosed no conflicts of interest.

Cost increases at Medicare’s Pioneer accountable care organizations were $385 million less than those of traditional fee-for-service Medicare in their first 2 years, without compromising patient satisfaction, a new study showed.

The Centers for Medicare & Medicaid Services launched the Pioneer ACOs in 2012 to control cost increases associated with a standard fee-for-service system that tends to favor better-compensated services.

Pioneer ACOs – which comprise established health care organizations opting to participate – also receive fee-for-service (FFS) payments, but they are encouraged to keep costs within limits by sharing both savings and risk if actual costs are lower or higher than projected. The goal is to encourage providers to direct more resources to services that may be less lucrative but are associated with better patient outcomes and patient experiences.

Research published online May 4 in JAMA (doi:10.1001/jama.2015.4930) compared spending for two populations of Medicare beneficiaries in 2012 and 2013: one associated with one of 32 Pioneer ACOs, and a larger group under standard FFS Medicare in the same markets, according to David J. Nyweide, Ph.D., of the Centers for Medicare & Medicaid Services, Baltimore, and his associates.

For 2012, the investigators found that cost increases were $35.62 lower per beneficiary per month for the Pioneer ACO patients, compared with patients living in the same markets but not affiliated with a Pioneer ACO – a total difference in 2012 of about $280 million overall.

In the second year of the study, 2013, the difference in costs increases dropped by two-thirds, to $11.18 per ACO beneficiary per month – about $105 million less in cost increases incurred by the Pioneer ACOs.

About half of the savings, Dr. Nyweide and his associates reported, came from smaller increases in inpatient care spending among the Pioneer-aligned Medicare patients ($14.40 less per patient per month in 2012 and $6.46 less in 2013), compared with FFS patients. There were, however, also differences in physician services ($8.29 less per ACO patient per month in 2012 and $2.69 less in 2013), along with smaller savings in tests, procedures, and imaging, compared with non–Pioneer-aligned Medicare beneficiaries.

Performance for Pioneer ACO populations was shown to be better in terms of patient-reported timely care and clinician communication, the investigators found. ACO performance was comparable to traditional fee-for-service and Medicare Advantage programs in ease of getting care and access to specialists.

Dr. Nyweide and his colleagues surmised that decreases in spending growth may have been greater in the first year as the ACOs focused first on management of high-cost patients, savings that may have been harder to sustain the following year. Physician turnover may have contributed to the lower savings seen in 2013, they acknowledged.

In addition, “since beneficiaries in the comparison group could still receive care from ACO-affiliated physicians, the practice patterns of those physicians may have affected the care of other Medicare patients,” more closely aligning costs between the study arms, the investigators wrote.

Although the results were encouraging, savings generated by ACOs “will have little effect on U.S. health care” unless a large number of ACOs enter the program, Dr. Lawrence P. Casalino of Cornell University, New York, noted in an editorial accompanying the study (JAMA 2015 May 4 [doi:10.1001/jama.2015.5086]).

Of the 32 original Pioneer ACOs, however, 13 have left the program, he noted, adding that many have opted to participate instead in the Medicare Shared Savings Program, which does not come with either the higher level of reward for keeping costs down or the risk of the Pioneer ACOs.

Medicare will have to create stronger incentives for ACOs, Dr. Casalino argued, which should be rewarded “not only for improving their own performance – a difficult task, year after year, for ACOs that already perform well – but also for improving compared with their region and with the nation as a whole.” And Medicare patients will require stronger incentives, such as waived copays, to keep their care within the ACO.

The new evidence “moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined,” wrote Dr. Mark McClellan of the Brookings Institution, Washington, in a separate editorial (JAMA 2015 May 4 [doi:10.1001/jama.2015.5087]). “Payment reform moving away from FFS is now part of the policy landscape, but the exact form it will take is less clear. Evaluations like this, derived from actual payment reforms, can provide more clarity.”

Nonetheless, “these early results may be viewed as modest,” cautioned Dr. McClellan, former administrator of the Centers for Medicare & Medicaid Services. “The smaller increase in spending amounted to 4% in year 1 and less than 1.5% in year 2. The estimates do not account for the shared-savings payments to the ACOs, which totaled $77 million in 2012. Nor do they account for the investments of time and money made by the health care organizations.”

The Centers for Medicare & Medicaid Services funded the study. Dr. Nyweide and his colleagues reported no conflicts of interest related to the study. Dr. Casalino reported receiving advisory fees on health care delivery and payment from the American Medical Association, part-time employment as an advisor to the Agency for Healthcare Research and Quality, and serving as coinvestigator and coauthor on articles with Dr. Nyweide not related to ACOs. Dr. McClellan disclosed no conflicts of interest.

Cost increases at Medicare’s Pioneer accountable care organizations were $385 million less than those of traditional fee-for-service Medicare in their first 2 years, without compromising patient satisfaction, a new study showed.

The Centers for Medicare & Medicaid Services launched the Pioneer ACOs in 2012 to control cost increases associated with a standard fee-for-service system that tends to favor better-compensated services.

Pioneer ACOs – which comprise established health care organizations opting to participate – also receive fee-for-service (FFS) payments, but they are encouraged to keep costs within limits by sharing both savings and risk if actual costs are lower or higher than projected. The goal is to encourage providers to direct more resources to services that may be less lucrative but are associated with better patient outcomes and patient experiences.

Research published online May 4 in JAMA (doi:10.1001/jama.2015.4930) compared spending for two populations of Medicare beneficiaries in 2012 and 2013: one associated with one of 32 Pioneer ACOs, and a larger group under standard FFS Medicare in the same markets, according to David J. Nyweide, Ph.D., of the Centers for Medicare & Medicaid Services, Baltimore, and his associates.

For 2012, the investigators found that cost increases were $35.62 lower per beneficiary per month for the Pioneer ACO patients, compared with patients living in the same markets but not affiliated with a Pioneer ACO – a total difference in 2012 of about $280 million overall.

In the second year of the study, 2013, the difference in costs increases dropped by two-thirds, to $11.18 per ACO beneficiary per month – about $105 million less in cost increases incurred by the Pioneer ACOs.

About half of the savings, Dr. Nyweide and his associates reported, came from smaller increases in inpatient care spending among the Pioneer-aligned Medicare patients ($14.40 less per patient per month in 2012 and $6.46 less in 2013), compared with FFS patients. There were, however, also differences in physician services ($8.29 less per ACO patient per month in 2012 and $2.69 less in 2013), along with smaller savings in tests, procedures, and imaging, compared with non–Pioneer-aligned Medicare beneficiaries.

Performance for Pioneer ACO populations was shown to be better in terms of patient-reported timely care and clinician communication, the investigators found. ACO performance was comparable to traditional fee-for-service and Medicare Advantage programs in ease of getting care and access to specialists.

Dr. Nyweide and his colleagues surmised that decreases in spending growth may have been greater in the first year as the ACOs focused first on management of high-cost patients, savings that may have been harder to sustain the following year. Physician turnover may have contributed to the lower savings seen in 2013, they acknowledged.

In addition, “since beneficiaries in the comparison group could still receive care from ACO-affiliated physicians, the practice patterns of those physicians may have affected the care of other Medicare patients,” more closely aligning costs between the study arms, the investigators wrote.

Although the results were encouraging, savings generated by ACOs “will have little effect on U.S. health care” unless a large number of ACOs enter the program, Dr. Lawrence P. Casalino of Cornell University, New York, noted in an editorial accompanying the study (JAMA 2015 May 4 [doi:10.1001/jama.2015.5086]).

Of the 32 original Pioneer ACOs, however, 13 have left the program, he noted, adding that many have opted to participate instead in the Medicare Shared Savings Program, which does not come with either the higher level of reward for keeping costs down or the risk of the Pioneer ACOs.

Medicare will have to create stronger incentives for ACOs, Dr. Casalino argued, which should be rewarded “not only for improving their own performance – a difficult task, year after year, for ACOs that already perform well – but also for improving compared with their region and with the nation as a whole.” And Medicare patients will require stronger incentives, such as waived copays, to keep their care within the ACO.

The new evidence “moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined,” wrote Dr. Mark McClellan of the Brookings Institution, Washington, in a separate editorial (JAMA 2015 May 4 [doi:10.1001/jama.2015.5087]). “Payment reform moving away from FFS is now part of the policy landscape, but the exact form it will take is less clear. Evaluations like this, derived from actual payment reforms, can provide more clarity.”

Nonetheless, “these early results may be viewed as modest,” cautioned Dr. McClellan, former administrator of the Centers for Medicare & Medicaid Services. “The smaller increase in spending amounted to 4% in year 1 and less than 1.5% in year 2. The estimates do not account for the shared-savings payments to the ACOs, which totaled $77 million in 2012. Nor do they account for the investments of time and money made by the health care organizations.”

The Centers for Medicare & Medicaid Services funded the study. Dr. Nyweide and his colleagues reported no conflicts of interest related to the study. Dr. Casalino reported receiving advisory fees on health care delivery and payment from the American Medical Association, part-time employment as an advisor to the Agency for Healthcare Research and Quality, and serving as coinvestigator and coauthor on articles with Dr. Nyweide not related to ACOs. Dr. McClellan disclosed no conflicts of interest.