ACOs associated with integrated systems, not high medical spending

Provider integration--not high medical spending--appears to drive the formation of accountable care organizations, according to a new study in Health Affairs.

Policy researchers from the RAND Corporation in Boston and Harvard Medical School analyzed where ACOs in the country have formed to determine whether regional factors influence their growth. They based their analysis on the 116 Medicare Shared Savings Program ACOs and the original 32 Pioneer ACOs, which include an estimated 2.3 million Medicare fee-for-service beneficiaries. They also looked at 77 private sector ACO-like organizations.

ACOs, they wrote, are based on whether they are able to offer better quality care, which attracts beneficiaries of all income levels. The success of ACOs also depends on whether they can control hospital utilization, not hospital prices, which are fixed under Medicare fee-for-service.

Their key findings: Regional factors that influence ACO formation include greater hospital risk sharing or capitation, larger integrated hospitals systems and large primary care physician practices. However, area income, Medicare per capita spending, Medicare Advantage enrollment rates and physician concentration do not appear to play a role.

"Together," lead researcher David I. Auerbach and his team wrote, "these results imply that underlying provider integration in a region may help drive the formation of ACOs."

The researchers wrote that areas of high-spending could be future sites of ACOs if spending levels indicate unnecessary care, costs that an organization could reduce via better management, or a lack of infrastructure and integration amendable to controlling costs. "Overall, there may simply be too many competing factors associated with area-level spending and ACO formation to observe a consistent relationship at this level of aggregation," they wrote in the study.

However, they warned, unobserved factors, such as health system leadership or orientation, also may explain infrastructure and ACO formation. "Further research into these relationships, including discussions with health system executives, would undoubtedly be useful in a time of considerable flux and uncertainty," they concluded.

For more:
- here's the study abstract
- read the study (.pdf, subscription required)