Analysis: ACOs save money by shifting care away from skilled nursing facilities

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Providers taking part in a Medicare experiment saved money by funneling care away from skilled-nursing facilities and other settings, and toward physician services, according to a new analysis.

The study — conducted by consulting firm Leavitt Partners and the Duke-Margolis Center for Health Policy — took a closer look at data from the Medicare Shared Savings Program, which rewarded providers for better coordinating care, between 2013 and 2016. Overall, the researchers found that money spent on SNFs, as well as what's spent on ambulance services and durable medical equipment, decreased during the four years. Money spent on physician services in accountable care organizations, meanwhile, increased, according to the study, which was published in the March issue of the American Journal of Accountable Care.

A 1% decrease in spending on SNFs, the authors found, accompanied a 0.82% increase in savings for ACO participants. Overall, ACOs that found savings in the first four years of accountable care, spent about 0.36% less on inpatient costs, 0.31% less on SNFs, and 0.16% less on home health.

“The ACOs that improved their savings rate most rapidly were those that had shifted SNF and inpatient expenditures more dramatically. This finding indicates that the degree to which ACOs shift their expenditures matters and that significant additional savings can be gained by shifting inpatient and SNF spending toward physician services,” authors wrote in the study.

Authors say that further research is needed to understand why ACOs are making these moves, and what actions are being taken to increase spending on physician services and decrease dollars toward SNFs.

Study authors concluded that the tactic of shifting care away from SNFs and toward physician offices should be explored by other ACOs as a way to “achieve greater reductions in overall spending without compromising quality.”

“The potential for success we're seeing is particularly encouraging given that the Medicare population is primarily older and with more chronic conditions,” said co-author Mark McClellan, M.D., Ph.D., director of the Duke-Margolis Center for Health Policy, in a press release. “This suggests more success could be generated in other populations and settings – public and private – and by moving ACOs into more advanced risk-sharing.”