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VALUE AND PERFORMANCE OF ACCOUNTABLE CARE ORGANIZATIONS: A COST-MINIMIZATION ANALYSIS

Published online by Cambridge University Press:  11 July 2018

Sonal Parasrampuria ,
Allison H. Oakes ,
Shannon S. Wu ,
Megha A. Parikh  and
William V. Padula
Sonal Parasrampuria
Affiliation:
Department of Health Policy & Management, Johns Hopkins Bloomberg School of Public Health
Allison H. Oakes
Affiliation:
Department of Health Policy & Management, Johns Hopkins Bloomberg School of Public Health
Shannon S. Wu
Affiliation:
Department of Health Policy & Management, Johns Hopkins Bloomberg School of Public Health
Megha A. Parikh
Affiliation:
Department of Health Policy & Management, Johns Hopkins Bloomberg School of Public Health
William V. Padula
Affiliation:
Department of Health Policy & Management, Johns Hopkins Bloomberg School of Public Healthwpadula@jhu.edu
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Abstract

Objectives:

Determine the relationship between quality of an accountable care organization (ACO) and its long-term reduction in healthcare costs.

Methods:

We conducted a cost minimization analysis. Using Centers for Medicare and Medicaid cost and quality data, we calculated weighted composite quality scores for each ACO and organization-level cost savings. We used Markov modeling to compute the probability that an ACO transitioned between different quality levels in successive years. Considering a health-systems perspective with costs discounted at 3 percent, we conducted 10,000 Monte Carlo simulations to project long-term cost savings by quality level over a 10-year period. We compared the change in per-member expenditures of Pioneer (early-adopters) ACOs versus Medicare Shared Savings Program (MSSP) ACOs to assess the impact of coordination of care, the main mechanism for cost savings.

Results:

Overall, Pioneer ACOs saved USD 641.24 per beneficiary and MSSP ACOs saved USD 535.59 per beneficiary. By quality level: (a) high quality organizations saved the most money (Pioneer: USD 459; MSSP: USD 816); (b) medium quality saved some money (Pioneer: USD 222; MSSP: USD 105); and (c) low quality suffered financial losses (Pioneer: USD -40; MSSP: USD -386).

Conclusions:

Within the existing fee-for-service healthcare model, ACOs are a mechanism for decreasing costs by improving quality of care. Higher quality organizations incorporate greater levels of coordination of care, which is associated with greater cost savings. Pioneer ACOs have the highest level of integration of services; hence, they save the most money.

Keywords

Cost-benefitAccountable care organizationFee-for-serviceQualityPerformance
Type
Assessment
Information
International Journal of Technology Assessment in Health Care , Volume 34 , Issue 4 , 2018 , pp. 388 - 392
Copyright
Copyright © Cambridge University Press 2018 

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Footnotes

This work was supported through the Agency for Healthcare Research and Quality (AHRQ) (T32HS000029).

References

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