Investigating Spending in the Medicare Share Savings Program

October 4, 2018

Accountable care organizations (ACO) that participate in the Medicare Shared Savings Program (MSSP) are given incentives that encourage them to lower spending for Medicare patients while performing highly on a set of quality measures. However, little is known about the extent to which these ACO’s early savings have grown and if the same results have been replicated by ACOs that entered the program in later years.

A study in the New England Journal of Medicine by Warren Alpert Foundation Professor of Health Care Policy J. Michael McWilliams, MD, PhD, associate professor of health care policy (biostatistics) Laura A. Hatfield, PhD, professor of health care policy Bruce E. Landon, MD, MBA, health care policy researcher Pasha Hamed, MA, and Leonard D. Schaeffer Professor of Health Care Policy Michael Chernew, PhD, investigates the spending of these ACOs after three years in the MSSP.

The study team investigated Medicare claims from 2009 through 2015 utilizing a difference-in-difference design to compare changes in Medicare spending for ACO patients before and after the ACOs entered into the MSSP with concurrent changes in spending for other patients served by nearby providers not participating in the MSSP. The differential changes, which indicated the extent to which ACOs reduced Medicare spending, were estimated separately for hospital-integrated ACOs and physician-group ACOs.

They found that physician-group ACOs achieved growing spending reductions over three years of participation, netting Medicare $256 million in 2015 after accounting for bonus payments. In contrast, hospital-integrated ACOs did not achieve savings, on average.

This study was funded by the National Institute on Aging.