Medicare’s Pioneer ACOs Ending with a Whimper?

This blog has covered the mediocre and inconclusive results of Medicare’s Pioneer Accountable Care Organization (ACO) model for a couple of years now. A new research paper in JAMA, the Journal of the American Medical Association furthers the narrative that the much ballyhooed program has very slim results:

 

Results  Total spending for beneficiaries aligned with Pioneer ACOs in 2012 or 2013 increased from baseline to a lesser degree relative to comparison populations. Differential changes in spending were approximately −$35.62 (95% CI, −$40.12 to −$31.12) per-beneficiary-per-month (PBPM) in 2012 and -$11.18 (95% CI, −$15.84 to −$6.51) PBPM in 2013, which amounted to aggregate reductions in increases of approximately −$280 (95% CI, −$315 to −$244) million in 2012 and −$105 (95% CI, −$148 to −$61) million in 2013. Inpatient spending showed the largest differential change of any spending category (−$14.40 [95% CI, −$17.31 to −$11.49] PBPM in 2012; −$6.46 [95% CI, −$9.26 to −$3.66] PBPM in 2013). Changes in utilization of physician services, emergency department, and postacute care followed a similar pattern. Compared with other Medicare beneficiaries, ACO-aligned beneficiaries reported higher mean scores for timely care (77.2 [ACO] vs 71.2 [FFS] vs 72.7 [MA]) and for clinician communication (91.9 [ACO] vs 88.3 [FFS] vs 88.7 [MA]).

Let’s leave the quality measurements aside for now, and focus on the fiscal effects. There appears to be a small positive effect. However, it appears extremely slim and likely even illusory for a number of reasons:

• The research looks at Pioneer ACOs for the first two years of the program, 2012 and 2013. However, nine of the 32 ACOs that launched in 2012 dropped out at the end of the first year. Thus, an examination of two years of results contains huge survivorship bias.
• The pioneer program was deliberately established for high-cost practices (e.g. Beth Israel Deaconess Physician Organization in the Boston, MA area). It should be relatively easy for these organizations to respond to incentives to reduce costs, but it will be very difficult to replicate their efforts elsewhere.
• The low-hanging fruit was plucked very quickly: Savings shrank by over two thirds from 2012 ($35.62 PMPM) to 2013 ($11.18 PMPM). How much fat is left to cut in the next year?
• Aggregate Medicare savings were trivial: $280 million in 2012 and just $105 million in 2013, a year in which total Medicare spending was $583 billion.

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