A study by Dartmouth Institute For Policy and Clinical Practice finds coordinated care for patients with complex needs a big winner for ACOs.

Currently there are now over 700 Accountable Care Organizations (ACO) in place across the country, covering 23 million Americans and making them one of the largest healthcare payment and delivery reforms underway in the United States. Until recently, little has been known about the effect of Medicare ACOs on overall spending, and whether they have been able to reduce the use of high-cost care settings such as hospital stays and emergency department visits.

“Coordinated care for patients with complex needs was hailed as the big winner. Total spending declined by more than $450 annually per patient among beneficiaries with three or more conditions, compared to just $136 annually among all Medicare patients.”

The Dartmouth Institute researchers found that Medicare ACOs are making modest, yet increasing gains in these areas, particularly when it comes to treating patients with multiple conditions who are responsible for the greatest proportion of spending.

Coordinated care for patients with complex needs was hailed as the big winner. Total spending declined by more than $450 annually per patient among beneficiaries with three or more conditions, compared to just $136 annually among all Medicare patients.

Medicare ACOs were associated with the following reductions: 1.4% in hospitalizations, 1.4% in acute-care spending, 1.9% in emergency department visits and … 5% in skilled nursing facility spending.

The study, published in the JAMA Internal Medicine, analyzed the impact of 252 Medicare ACOs implemented from 2012 through 2013. Medicare ACOs saved an estimated $136 per patient annually due in part to spending decreases in hospital care and skilled nursing facility care. Notably, for clinically vulnerable patients (those treated for three or more conditions), savings increased to $456 per patient annually.

Using five years of Medicare claims data (2009-2013), the researchers analyzed two population segments: the overall Medicare population, and a subgroup of Medicare beneficiaries treated for three or more conditions (22% of the overall Medicare population). Colla and fellow Dartmouth Institute co-authors, Valerie Lewis, PhD; Lee-Sien Kao; A. James O’Malley, PhD; Chiang-Hua Chang, PhD; and Elliott Fisher, MD, MPH, also looked at total Medicare ACO spending per quarter in areas such as acute care, medical procedures, and long-term care. Findings from the study include:

  • Total spending decreased by $136 annually per beneficiary across the overall Medicare population and $456 annually per beneficiary in the multiple conditions subgroup.
  • Overall, Medicare ACOs are associated with a 1.4% reduction in hospitalization, a 1.4% reduction in acute care spending, a 1.9% reduction in emergency department visits, and a 5% reduction in skilled nursing facility spending.
  • The reductions represent an estimated total savings of $592 million among clinically vulnerable beneficiaries with multiple conditions within the first 1-2 years of ACO implementation.

“With Medicare ACOs, the majority of the savings is concentrated on patients with complex medical needs, indicating that coordinated care is likely a factor in being able to more efficiently treat chronic illness,” Colla says.


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