Editor’s Desk

Harvard researchers say Pioneer ACOs reduce spending but by a modest amount

Peter Wehrwein

If the jury is still out on ACOs, a study by Harvard researchers published in today’s New England Journal of Medicine could be a sign that the verdict will ultimately be that they work.

Judging by these results, ACOs seem effective at reducing health spending, albeit by a modest amount, but may not make much of a difference when it comes to performance measures like hospital readmission.

CMS has previously reported that Pioneer ACOs are a spending reduction success story and save the Medicare program money.

What’s new here is that an independent group of researchers, using some rigorous research methods, have arrived at pretty much the same conclusion.

The Harvard researchers also supplied some details and nuances. Here are a few of them:

  • Savings were greater in ACOs with baseline spending above the local average spending in their area and in ACOs in high spending areas like Boston. This isn’t a huge surprise. It makes sense that spending reductions might be easier for organizations that are high-end spenders to begin with.
  • Savings were similar for 13 organizations that dropped out of the Pioneer program as the ones that stuck with it. CMS had calculated that 12 of those 13 dropouts had minimal savings or losses relative to their financial benchmarks. The Harvard researchers say their numbers argue for greater and more reliable rewards for staying in the ACO program, including increased shared-saving rates and benchmarking that would account for local spending growth.
  • Savings for ACOs organizations that are financially integrated hospital and physician systems were no greater than organizations without those vertical arrangements. The takeaway from the Harvard researchers is that kind of provider consolidation may not be necessary for ACO success after all.  

The overall finding of the study was that Pioneer ACOs as a group program reduced health care spending by 1.2%, or by $29.20 per beneficiary per quarter, during the first year of the program.

That modest but statistically significant decrease translates into $118 million less in Medicare spending when the spending reductions by all 32 Pioneer ACOs savings are added up.  That total exceeds the $76 million in bonuses paid by CMS to the Pioneers ACOs by $42 million, the Harvard researchers pointed out. In other words, it was an okay deal for taxpayers.

The Pioneer ACOs did not, though, result in significant changes in hospital readmission rates, screening mammography, or hospitalizations for conditions like congestive heart failure, which research has shown can be prevented with appropriate ambulatory care. If you are going to argue for ACOs, it appears it will have to be on economic grounds, not big gains in health care quality. The Pioneers were associated with a small increase in the rate of use of preventive services for diabetes, according to the Harvard researchers.