Study examines relationship of a commercial ACO contract with medical spending

(Press-News.org) Payment incentives implemented with a commercial accountable care organization (ACO) initiative in Massachusetts –Blue Cross Blue Shield's Alternative Quality Contract (AQC) – were associated with lower spending for Medicare enrollees served by the provider groups participating in the AQC, findings that suggest that evaluations of ACO programs may need to consider the implications for other patient populations to assess their full clinical and economic benefits, according to a study in the August 28 issue of JAMA.

"In response to mounting pressures to deliver more cost-effective care, provider organizations have exhibited increasing willingness to assume financial risk for the quality and costs of the care they provide. More than 250 provider groups have contracted with Medicare as ACOs, and many similar payment arrangements have been reached with commercial insurers by these and other groups," according to background information in the article. "In a multipayer system, new payment incentives implemented by one insurer for an ACO may also affect spending and quality of care for another insurer's enrollees served by the ACO. Such spillover effects reflect the extent of organizational efforts to reform care delivery and can contribute to the net impact of ACOs."

J. Michael McWilliams, M.D., Ph.D., of Harvard Medical School, Boston, and colleagues conducted a study to examine whether the Blue Cross Blue Shield (BCBS) of Massachusetts' Alternative Quality Contract (AQC), an early commercial ACO initiative associated with reduced spending and improved quality for BCBS enrollees, was also associated with changes in spending and quality for Medicare beneficiaries, who were not covered by the AQC. The study included comparisons from 2007-2010 of elderly fee-for-service Medicare beneficiaries in Massachusetts served by 11 provider organizations entering the AQC in 2009 or 2010 (intervention group) vs. beneficiaries served by other providers (control group). The researchers estimated changes in spending and quality for the intervention group in the first and second years of exposure to the AQC relative to concurrent changes for the control group. The primary outcome was total quarterly medical spending per beneficiary. Secondary outcomes included spending by setting and type of service, 5 process measures of quality, potentially avoidable hospitalizations, and 30-day readmissions.

The researchers found that differential changes in sociodemographic and clinical characteristics were small for the intervention group relative to the control group, and none was statistically significant, suggesting that the findings were not due to changes in patient case mix. Adjusted total quarterly spending was $150 higher for the intervention group than for the control group, and spending trends were similar before AQC incentives were implemented for participating organizations. "In year 2 of the intervention group's exposure to the AQC, the spending difference between the intervention and control groups was reduced to $51, constituting a significant differential change of -$99 or a 3.4 percent savings relative to an expected quarterly mean of $2,895. Savings in year 1 were not statistically significant."

Savings in year 2 were explained largely by differential changes in outpatient care (-$73) and included significant differential changes in spending on office visits, emergency department visits, minor procedures, imaging, and laboratory tests. Estimated savings in year 2 spending on outpatient care for the intervention group were greater among beneficiaries with 5 or more conditions (-$125) than among those with fewer conditions (-$61).

"Annual rates of low-density lipoprotein cholesterol testing differentially improved for beneficiaries with diabetes in the intervention group by 3.1 percentage points and for those with cardiovascular disease by 2.5 percentage points, but performance on other quality measures did not differentially change," the authors write.

"Our findings have several implications for payment and delivery system reforms. In general, cost-reducing spillover effects of ACO contracts with one insurer on care for other insurers' enrollees should signal a willingness among provider organizations generating the spillovers to enter similar contracts with additional insurers; they could be rewarded for the savings and quality improvements achieved for the other insurers' enrollees. Broad organizational responses to early ACO initiatives, like those suggested by our findings, might support a rapid transition among ACOs to global payment arrangements with multiple payers. Conversely, cost-reducing spillovers present a free-riding problem to commercial insurers engaged in ACO contracts, since competing insurers with similar provider networks could offer lower premiums without incurring the costs of managing an ACO. Additional efforts to foster multipayer participation in global payment sys¬tems, such as recent state initiatives and provisions in Pioneer Medicare ACO contracts, may be important."

"… our 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. Although effects of commercial and Medicare ACO initiatives similar to the AQC may differ in other markets, these findings suggest potential for these payment models to foster systemic change in care delivery. Evaluations of ACO programs may need to consider spillover effects on other patient populations to assess their full clinical and economic benefits," the researchers conclude. ### (JAMA. 2013;310(8):829-836; Available pre-embargo to the media at http://media.jamanetwork.com)

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