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ACOs Work, but New Tools and Approaches Are Needed

At QURE, we get up every morning because we believe in our mission to improve health care quality and reduce costs through measurement and feedback. We’ve naturally been excited by the growing body of literature showing that new payment models providing financial incentives for achieving these twin goals have a real impact.

In June of this year, Nyweide and colleagues at CMS added important additional evidence that properly aligned incentives lead to reduced cost without sacrificing quality. In JAMA, they reported results from the first two years of Medicare’s Pioneer ACO program, covering 2012 and 2013. As a brief reminder, the Pioneer ACO program is structured such that participating organizations that care for their patients at a lower total cost than expected receive a portion of those savings as direct payments. To receive the shared savings payments, however, organizations must also meet specific quality and patient experience thresholds. Compared to the more common Medicare Shared Savings Program (MSSP), the Pioneer ACOs have the opportunity for greater financial upside, but, as of 2013, the responsibility to also share in losses if spending exceeded targets.

We found three key take-aways from this latest report:

  1. We can reduce spending without sacrificing quality or experience

The headline from the study is that the 32 Pioneer ACOs saved a total of $385M in 2012 and 2013, when compared to similar groups of patients not attributed to one of the ACOs. It’s not often that programs can claim saving hundreds of millions of dollars. Not surprisingly, reductions in inpatient spending showed the largest cost savings, and decreases were also seen in physician services, ED and post-acute care. Importantly, quality measures did not suffer and Pioneer ACO patients even reported higher satisfaction with access to timely care and clinical communication.

  1. Achieving savings is hard

The aggregate numbers above are impressive, but the Pioneer ACO experience also shows that achieving and sustaining these savings is difficult work. First, most of the savings was realized in the first year. After achieving $280M in savings in 2012, this total fell to $185M in 2013, suggesting that finding savings after targeting the initial low-hanging fruit is more difficult. Second, 13 of the original 32 participants have left the program. Many of the departures were from organizations that were unable to achieve or sustain savings.

  1. There is much more to do

The numbers reported here are trivial when compared to Medicare’s nearly $600 billion annual spend, but they do represent a 4% reduction in spending that, if extended nationwide, would go a long way in “bending the cost curve.” Recognizing this, CMS has announced that they will expand the Pioneer model to other organizations. However, given the struggles many of the hand-picked, well-established early Pioneer participants faced, it is clear that others moving down this road must be thoughtful and deliberate about the tools and strategies they employ.

Driving these savings in a sustainable way, without sacrificing quality, will require multiple approaches including better patient engagement, big data analytics and tighter integration across the care continuum. Most importantly, it will also require directly involving providers around evidence-based care that reduces unwarranted variation. At QURE we have proven that engaging clinicians with Clinical Performance and Value (CPV®) vignettes supports cost savings efforts within ACOs. As one example, our recently published work with the Providence Medical Group demonstrates nearly $800,000 in annual savings opportunities across just 24 cardiology providers.

QURE continues to generate exciting evidence that measuring care practice and engaging providers around variation reduction is essential to realizing the twin goals of high quality and low cost. These goals will increasingly define success as new payment models, like the Pioneer ACO, become more and more common across the country.

Sources: Nyweide DJ, et al. Association of Pioneer Accountable Care Organizations vs Traditional Medicare Fee for Service With Spending, Utilization, and Patient Experience JAMA. 2015; 313(21):2152-2161.

Peabody JW, et al. Managing Specialty Care in an Era of Heightened Accountability: Emphasizing Quality and Accelerating Savings. Am J Manag Care. 2015;21(4):284-292