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Medicare ACOs Save Costs, Reduce ER, and Hospital Use for Clinically Vulnerable Patients

June 24, 2016

Through reductions in use of hospitals and emergency departments for clinically vulnerable patients, Medicare Accountable Care Organizations (ACO) were able to achieve moderate reductions in spending, according to a new study.

Clinically vulnerable patients, or those with serious conditions, are reportedly responsible for the highest proportion of spending. Therefore, improving the quality of care for these patients could have a large effect on both patient outcomes and financial rewards for physician groups participating in ACOs, for whom financial incentives are tied to the quality of care provided.

In order to estimate the effect of Medicare ACO contracts on spending, a cohort study was conducted, focusing on 2 study populations: the overall Medicare population and the clinically vulnerable subgroup of Medicare beneficiaries. Participants entered the study during the quarter between January 2009 to December 2011 when they first had at least 3 Hierarchical Condition Categories (HCCs) and remained in the study until death. The participants in the Medicare population were based on a random 40% sample, drawn from continuously enrolled fee-for-service beneficiaries, with at least 1 evaluation and management visit within a calendar year. The participants in the clinically vulnerable population included all Medicare beneficiaries who were 66 years or older, who had at least 3 HCCs. Researchers published their findings in the online JAMA Internal Medicine.

Total spending per beneficiary-quarter after ACO contract implementation across the overall Medicare population (n = 15,592,600) decreased by $34 (95% CI, −$52 to −$15). Across the clinically vulnerable population (n = 8,673,823), spending per beneficiary-quarter decreased by $114 (95% CI, −$178 to −$50). The changes in total spending did not vary by clinical condition of any beneficiary.

Hospitalizations and emergency department visits decreased by 1.3 and 3.0 events per 1000 beneficiaries per quarter, respectively (95% CI, −2.1 to −0.4 and −4.8 to −1.3, respectively) in the overall Medicare cohort. As for hospitalizations and emergency department visits in the overall clinically vulnerable cohort, visits decreased by 2.9 and 4.1 events per 1000 beneficiaries per quarter, respectively (95% CIs: −5.2 to −0.7 and −7.1 to −1.2).

Carrie Colla, PhD, lead author of the study commented, “What we're finding is that reductions in total spending associated with ACOs are modest, increase slightly over time, and demonstrate savings consistent with other evaluations of ACO impact."



Colla CH, Lewis VA, Kao LS, et al. Association Between Medicare Accountable Care Organization Implementation and Spending Among Clinically Vulnerable Beneficiaries. JAMA Intern Med. Published online June 20, 2016. doi:10.1001/jamainternmed.2016.2827.

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