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Report: ACOs May Provide ‘Spillover’ Health Care Savings

Massachusetts cost-sharing program helps Medicare patients (August 28)

A program focused on primary care and coordination of services between groups of doctors and hospitals reduced costs for patients who were not even covered by the plan, according to a new study published in the Journal of the American Medical Association (JAMA).

Researchers at Harvard Medical School found that an early cost-sharing program in Massachusetts designed to cut costs for private Blue Cross Blue Shield (BCBS) patients also lowered costs for Medicare patients who were seen by the same providers.

There are more than 428 accountable care organizations (ACOs) in the U.S., serving an estimated 14% of the population, including both Medicare and private-insurance patients.

However, only a portion of patients in a health care system are usually in an ACO — the rest of the patients served by a network remain in the regular fee-for-service system. Still, the Harvard researchers say there appears to be “spillover savings” for other patients in the health care system.

For example, a computer reminder can keep doctors from ordering unnecessary and expensive tests, such as magnetic resonance imaging (MRI) for people with low back pain. Once set up, that type of alert would show up regardless of whether a patient was covered by an ACO or by Medicare.

In the Harvard study, providers in the private BCBS Alternative Quality Contract, an ACO-like effort, achieved a significant savings (more than 3%) within 2 years for the Medicare patients they saw, compared with a control group of Medicare patients seen by providers at other Massachusetts hospitals. The average savings in outpatient care was $73 per patient and included “significant differential changes in spending on office visits, emergency department visits, minor procedures, imaging, and laboratory tests.”

But there may be a downside for insurers backing an ACO: their competitors may get the spillover benefits of hard-earned efficiency. Other insurers operating in the same hospital could become “free-riders” that can offer lower premiums without incurring the costs of managing an ACO.

Sources: Kaiser Family Foundation; August 28, 2013; and Reuters; August 27, 2013.

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