ACO Participation Cuts Medicare Spending on Serious Mental Illness

August 09, 2022 - Mental healthcare is costly for both Medicare and its beneficiaries, but ACO participation may help reduce the expenses for those facing serious mental illness, according to a new study published in Health Affairs.

Researchers from Harvard and Yale University analyzed a sample of Medicare administrative data from 2009 to 2017. They found that ACOs participating in the Medicare Shared Savings Program (MSSP) achieved small savings for Medicare fee-for-service beneficiaries with serious mental illnesses after five years of participation in the program. Total healthcare savings were about $233 per person per year.

However, most of the savings were related to reductions in spending on medical conditions, which included spending on inpatient care, home health care, physician fees, and skilled nursing facility payments. The savings were about $227 per person.

There was no statistically significant difference in spending related to mental health services. In fact, Medicare fee-for-service beneficiaries assigned to MSSP ACOs only saved about $6 per year on mental health services, the study showed.

Research shows that accountable care organizations (ACOs) have achieved modest savings and improved quality of care for the general Medicare population. However, few studies have analyzed the impact ACO participation has had on outpatient visits to mental health providers and whether the alternative care delivery and payment model has reduced spending for the Medicare population with serious mental illnesses.

“There are concerns that ACOs might not meaningfully affect care for patients with mental illness, with early data showing that ACOs are underinvesting in mental health programs,” researchers explained in the study.

“Early evidence also showed that ACOs had not meaningfully changed mental health spending or readmissions within one to two years of implementation. However, ACOs may be affecting care for other chronic conditions; better management of chronic conditions in the outpatient setting could reduce acute care use.”

The study’s findings raise important questions about ACO savings and the management of serious mental illnesses, a growing priority for healthcare providers.

Over 14 million US adults have a serious form of mental illness, such as bipolar disorder, schizophrenia, or major depressive disorder. Treatment for these disorders and other mental health disorders cost approximately $225 billion in 2019 alone, accounting for 5.5 percent of all US healthcare spending that year. What’s more, spending on mental health care increased by over 52 percent since 2009.

Medicare beneficiaries are more likely than the general population to suffer from one of the serious mental illnesses, researchers explained. The latest data finds that nearly 23 percent of the Medicare population has a serious mental illness.

ACOs may be mitigating some of the effects of mental illness on other conditions, such as chronic conditions, and preventing unnecessary utilization. Patients with mental illness tend to have poorly controlled medical conditions, prior research has shown.

However, researchers noted that the savings among attributed patients with serious mental illness were about half the savings observed among the general ACO population in previous studies.

Lack of behavioral health integration with traditional healthcare may be hindering savings on mental health care, researchers suggested.

“More recent data suggest that only 17 percent of ACOs reported implementing all components of the collaborative care model, which is a cost-effective model to treat mental illness that combines primary care and consulting behavioral health specialists with the support of mental health registries,” they wrote in the study.

“In addition, prior work found no significant change in the diagnoses of depression detected in ACO contracts, suggesting that screening for mental health disorders was likely not very different in ACOs versus non-ACOs despite it being incentivized as an MSSP quality measure.”

ACOs still have more work to do when it comes to addressing the growing issue of mental health disorders among their patients.