Estimates of ACO savings in the presence of provider and beneficiary selection.

BACKGROUND: Medicare's accountable care organizations (ACOs)-designed to improve quality and lower spending-were associated with growing savings in previous studies. However, savings estimates may be biased by beneficiary sorting among providers based on healthcare needs and by providers opting into the program based on anticipated gains. METHODS: Using Medicare administrative claims (2009-2014), we compared annual spending changes after provider organizations joined ACOs to changes in non-ACOs (controls). To address provider selection, using novel data to identify non-ACO organizations, we restricted controls to comparably large provider organizations. To address beneficiary selection, we (a) estimated within-organization (including non-ACO comparison organizations) spending changes, (b) estimated within-beneficiary spending changes, (c) incorporated beneficiaries without qualifying healthcare expenses, and (d) used a fixed beneficiary ACO assignment using the pre-ACO period. RESULTS: Each year, 19% of Medicare beneficiaries switched provider organizations. Spending was higher for switchers than stayers ($3163, p < .001) and grew more the next year ($2004; p < .001). Starting from a baseline regression modeled on previous ACO evaluations, estimated savings varied widely as we sequentially introduced methods to address selection. Combining methods, however, generated more stable estimated ACO savings of $46 (p = .022), averaged across cohorts. CONCLUSIONS: When implementing a comprehensive suite of methods to adjust for provider and beneficiary selection, we estimated ACO savings that grew over time. Our estimates are in line with, but smaller than, previous estimates in the literature. Implementing piecemeal adjustments produced misleading results. IMPLICATIONS: Our results confirm the importance of selection for savings estimates and for provider organizations managing costs and quality. Attribution rules that consider multiple years may help mitigate the impact of beneficiary churn for providers and payers. Implementing payment reform by randomizing early participants, or implementing fully across selected markets, may better serve efforts to evaluate and improve payment models. LEVEL OF EVIDENCE: Level 3.

Forgotten patients: ACO attribution omits those with low service use and the dying.

OBJECTIVES: Alternative payment models, such as accountable care organizations, hold provider groups accountable for an assigned patient population, but little is known about unassigned patients. We compared clinical and utilization profiles of patients attributable to a provider group with those of patients not attributable to any provider group. STUDY DESIGN: Cross-sectional study of 2012 Medicare fee-for-service beneficiaries 21 years and older. METHODS: We applied the Medicare Shared Savings Program attribution approach to assign beneficiaries to 2 mutually exclusive categories: attributable or unattributable. We compared attributable and unattributable beneficiaries according to demographics, dual eligibility for Medicaid, nursing home residency, clinical comorbidities, annual service utilization, annual spending, and 1- and 2-year mortality. We estimated multivariate regression models describing correlates of attribution status. RESULTS: Most beneficiaries (88%) were attributable to a provider group. The remaining 12% were unattributable. Beneficiaries unattributable to any provider group were more likely to be younger, male, and from a minority group; to have disability as the basis for enrollment; and to live in high-poverty areas. Unattributable beneficiaries included 3 distinct subgroups: nonusers of care, decedents, and those with healthcare service use but no qualifying evaluation and management visits. Many unattributable Medicare beneficiaries had minimal use of healthcare services, with the exception of a small subgroup of beneficiaries who died within the attribution year. CONCLUSIONS: Attribution approaches that more fully capture unattributable patients with low service use and patients near the end of life should be considered to reward population health efforts and improve end-of-life care.

Determinants of success in Shared Savings Programs: An analysis of ACO and market characteristics.

BACKGROUND: Medicare's Accountable Care Organization (ACO) programs introduced shared savings to traditional Medicare, which allow providers who reduce health care costs for their patients to retain a percentage of the savings they generate. OBJECTIVE: To examine ACO and market factors associated with superior financial performance in Medicare ACO programs. METHODS: We obtained financial performance data from the Centers for Medicare and Medicaid Services (CMS); we derived market-level characteristics from Medicare claims; and we collected ACO characteristics from the National Survey of ACOs for 215 ACOs. We examined the association between ACO financial performance and ACO provider composition, leadership structure, beneficiary characteristics, risk bearing experience, quality and process improvement capabilities, physician performance management, market competition, CMS-assigned financial benchmark, and ACO contract start date. We examined two outcomes from Medicare ACOs' first performance year: savings per Medicare beneficiary and earning shared savings payments (a dichotomous variable). RESULTS: When modeling the ACO ability to save and earn shared savings payments, we estimated positive regression coefficients for a greater proportion of primary care providers in the ACO, more practicing physicians on the governing board, physician leadership, active engagement in reducing hospital re-admissions, a greater proportion of disabled Medicare beneficiaries assigned to the ACO, financial incentives offered to physicians, a larger financial benchmark, and greater ACO market penetration. No characteristic of organizational structure was significantly associated with both outcomes of savings per beneficiary and likelihood of achieving shared savings. ACO prior experience with risk-bearing contracts was positively correlated with savings and significantly increased the likelihood of receiving shared savings payments. CONCLUSIONS: In the first year, performance is quite heterogeneous, yet organizational structure does not consistently predict performance. Organizations with large financial benchmarks at baseline have greater opportunities to achieve savings. Findings on prior risk bearing suggest that ACOs learn over time under risk-bearing contracts. IMPLICATIONS: Given the lack of predictive power for organizational characteristics, CMS should continue to encourage diversity in organizational structures for ACO participants, and provide alternative funding and risk bearing mechanisms to continue to allow a diverse group of organizations to participate. LEVEL OF EVIDENCE: III.