Practice Economics

ACO spillover effect: Lower spending for all



Implementing the requirements of an accountable care organization for one group of patients may lower costs and improve care for every patient seen in a physician’s practice, according to a study published online Aug. 27 in JAMA.

Dr. J. Michael McWilliams of Harvard Medical School, Boston, and his colleagues looked at whether the Blue Cross Blue Shield of Massachusetts’ Alternative Quality Contract (ACQ), a successful ACO started in 2009, was associated with changes in spending or quality of care for Medicare beneficiaries who were not part of the ACO.

In the AQC, physicians and other providers assumed financial risk if they spent more than a global budget, but shared savings with the insurer if spending was under budget. Physicians could also receive bonuses for meeting quality targets.


Organizations in Massachusetts willing to assume greater financial risk were capable of achieving modest reductions in spending for Medicare beneficiaries without compromising quality of care, wrote Dr. J. Michael McWilliams and his colleagues.

The investigators compared total quarterly medical spending per beneficiary between two groups: beneficiaries who received care through the AQC in 2009 or 2010 (1.7 million person-years) and controls who received care from other providers (JAMA 2013;310:829-836).

Quarterly spending per beneficiary in 2007 and 2008 (prior to the AQC contracts) was $150 higher for the AQC group than the control group. Two years after the ACQ contracts went into effect, the difference was $51 per quarter. The biggest reduction in spending was for beneficiaries with five or more conditions, and in spending on outpatient care. Spending was significantly reduced for office visits, emergency department visits, minor procedures, imaging, and lab tests.

Some improvement was seen on quality measures. The number of beneficiaries tested for low-density lipoprotein levels increased. Prior to the AQC, LDL testing rates for diabetic beneficiaries in the AQC group were 2.2% higher than for controls. By the second year, the testing rate was 5.2% higher for those in the AQC. LDL testing rates also improved for cardiovascular disease patients in the AQC.

No improvement was seen on other quality measures, including hospitalization for an ambulatory care–sensitive condition related to cardiovascular disease or diabetes; readmission within 30 days of discharge; screening mammography for women aged 65-69 years; LDL testing for beneficiaries with a history of ischemic heart disease, myocardial infarction, or stroke; and hemoglobin A1c testing and retinal exams for beneficiaries with diabetes.

"These findings suggest that global payment incentives in the AQC elicited responses from participating organizations that extended beyond targeted case management of BCBS enrollees," the authors wrote.

Overall, the study "suggests that organizations in Massachusetts willing to assume greater financial risk were capable of achieving modest reductions in spending for Medicare beneficiaries without compromising quality of care," wrote Dr. McWilliams and his colleagues.

The study also showed that physicians and provider organizations who see spillover effects from one ACO contract might be willing "to enter similar contracts with additional insurers."

But there is a potential downside to the spillover effect, according to the authors: Because cost and quality may be improved overall, "competing insurers with similar provider networks could offer lower premiums without incurring the costs of managing an ACO."

The study was supported by grants from the National Institute on Aging, the American Federation for Aging Research, the Doris Duke Charitable Foundation, and the Commonwealth Fund. The investigators reported no relevant conflicts of interest.

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