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Spending Patterns Among Medicare ACOs That Have Reduced Costs

Schulz, John, MD; DeCamp, Matthew, MD, PhD; Berkowitz, Scott A., MD

doi: 10.1097/JHM-D-17-00178

EXECUTIVE SUMMARY This study aimed to examine whether specific cost categories were disproportionately affected by accountable care organizations (ACOs) in the Medicare Shared Savings Program (MSSP) achieving overall spending reductions, and whether there were demonstrable differences in spending patterns between “low”- or “high”-cost ACOs. Using financial data obtained from the Centers for Medicare & Medicaid Services for ACOs launched between 2012 and 2015, and employing a cross-sectional study design, we determined which cost categories were associated with overall reductions in ACO spending. Linear regressions were conducted to discern whether reductions in inpatient and skilled nursing facility (SNF) costs were driven by reductions in the number of admissions or in the cost per admission. Results showed that ACOs that reduced total per capita spending saw the largest percentage decreases in inpatient (−9%), hospice (−11%), and SNF (−16%) per capita costs, compared to ACOs that were unable to decrease costs between 2014 and 2015 (p < .05). Reductions in SNF and inpatient spending were driven by declines in the number of patients admitted, not the cost per hospitalization or SNF admission (p < .05). In 2015, ACOs in the highest decile of per capita spending spent more than double on each beneficiary compared to ACOs in the lowest decile ($16,672 versus $8,030, respectively; p < .05). ACOs in the lowest-cost decile spent more proportionally on outpatient and physician/supplier costs (p < .05). Thus, we determined that initial success in reducing the cost of care has been driven by reductions in inpatient costs due to a decline in the volume of patients admitted. Future studies should further investigate specific interventions that allow high-performing ACOs to achieve these cost reductions.

Johns Hopkins University School of Medicine, Baltimore, Maryland

Johns Hopkins University School of Medicine

Johns Hopkins University School of Medicine

For more information about the concepts in this article, contact Dr. Berkowitz at

The authors declare no conflicts of interest.

© 2018 Foundation of the American College of Healthcare Executives
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