MSSP ACOs Save More By Spending Less on Inpatient, Post-Acute Care

February 23, 2018 - Medicare Shared Savings Program (MSSP) accountable care organizations (ACOs) have shifted their spending to physician services and away from inpatient and skilled nursing facility care, according to a recent study in the American Journal of Accountable Care.

The analysis of within-ACO changes between the program’s first performance year in 2013 and the most recent complete performance period in 2016 revealed that physician services was the only care setting to experience a spending increase year over year.

On average, per capita MSSP spending on physician services grew $190 between 2013 and 2016, researchers found using MSSP ACO Public Use Files.

Conversely, care settings that saw spending decreases in absolute terms included skilled nursing facility, ambulance services, and durable medical equipment. Researchers noted that skilled nursing facility spending also decrease as a proportion of spending between 2013 and 2016.

Inpatient spending as a percentage of total organization spending among MSSP ACOs also decreased since the program’s launch in 2013.

“We found that MSSP ACOs were shifting their expenditures and care utilization patterns,” wrote the study’s authors. “Between 2013 and 2016, MSSP ACOs made modest but nonetheless meaningful changes to where money was spent. MSSP ACOs are spending a smaller proportion of their money on inpatient services and PAC [post-acute care] services, such as SNFs [skilled nursing facilities] and home health, and a greater proportion of their money on services in the physician office setting and on hospice.”

While the average MSSP ACO is changing the organization’s spending patterns, ACOs that realized the greatest savings are making more dramatic shifts in expenditures by care setting, the study also found.

An increased percentage of spending on physician services and hospice was associated with MSSP ACOs that saved money. Meanwhile, increased spending on inpatient and skilled nursing facility care was associated with MSSP ACOs that did not save.

On average, MSSP ACOs that generated savings spent 0.36 percent less on inpatient, 0.31 percent less on skilled nursing facility, and 0.16 percent less on home health expenditures.

Researchers also uncovered that more substantial shifts away from inpatient and post-acute care spending was linked to greater savings. A 1 percent decrease in inpatient spending resulted in a 0.46 percent boost in savings rate, holding all else equal.

A 1 percent in skilled nursing facility spending was associated with a 0.82 percent increase in savings rate.

“Our finding, that shifting more money to the physician office setting and away from SNF [skilled nursing facility] and inpatient spending is correlated with greater overall savings, suggests that this tactic may be pursued by other ACOs as a strategy to achieve greater reductions in overall spending without compromising quality,” the study stated.

This finding may be of interest to a significant portion of MSSP ACOs. The programs saved Medicare about $652 million in 2016, with 56 percent of participating ACOs reducing their healthcare spending.

However, just 31 percent of the ACOs reduced their spending enough to qualify for shared savings payments.

Shifting spending to physician services could help MSSP ACOs further decrease their overall healthcare spending and earn shared savings payments, researchers indicated.

“Our findings are consistent with the argument that some services may provide more value, leading to reductions in the cost of delivering healthcare,” they wrote. “Increasing care in the physician office setting may reduce hospitalizations and the increased costs associated with inpatient stays, while focusing on well-structured care transitions between the hospital and the PAC setting may reduce unnecessary costs.”

Researchers also suggested that policymakers use the study to further incent providers to use lower-acuity, lower-cost settings.

The study showed that MSSP ACOs are increasing their savings rate and chances for earning shared savings payments by shifting their spending patterns to lower-cost care sites, such as physician offices and outpatient facilities.

Alternative payment models should incent providers to follow the pathway of MSSP ACOs. The models can help the industry to quickly reduce expensive hospital use.

Finally, researchers noted that policymakers and healthcare stakeholders should continue to analyze the spending patterns of ACOs. While spending pattern changes were modest among MSSP ACOs in the first few years of the program, the findings suggest that organizations are deliberately changing their care management patterns and realizing financial savings from it.

They expressed a “need for further understanding of how ACOs have made these changes, which could help the healthcare system rein in costs.”