More on Accountable Care

Out-of-network primary care tied to rising ACO costs

Decreasing the percentage of primary care delivered out-of-network across all ACOs by 0.1% could save Medicare $45 million a year.

Jeff Lagasse, Associate Editor

Accountable Care Organizations formed for the first time in 2011 and were designed to combat rising medical costs and provide more coordinated care to Medicare patients. But the savings have been inconsistent nationwide.

A new Portland State University study looked at what's driving these inconsistencies and what ACOs might do to resolve the issue. The study was published in the February issue of Health Affairs by OHSU-PSU School of Public Health Assistant Professor Sunny Lin.

One of the key findings is that primary care has the potential to be the key to reducing healthcare costs.

Decreasing the percentage of primary care delivered out-of-network across all Medicare ACOs by just one-tenth of a percentage point could save the Medicare system $45 million a year, the study found.


ACOs are self-organized providers working together to better control healthcare costs. The organizations have federal approval and receive Medicare funding, but in lieu of the traditional fee-for-service model, ACOs are incentivized to spend less per patient.

If they succeed in saving money through coordinated care, they share the remaining government funding. But ACOs have no control over who their patients see, including whether their patients seek care outside of the ACO network.

Ultimately, it doesn't matter how much specialty care is received by non-ACO providers. More important is how well their primary care providers are aligned in the ACO. The findings go against common wisdom that when it comes to spending, specialty care costs more.

The study found that "leakage" -- the percent of care patients receive outside their network -- impacts healthcare spending more for primary care providers than specialty care providers.

In marginalized communities or ACOs with a higher proportion of minority patients, leakage is even higher. This is likely because those populations have a harder time maintaining continuity of care and experience more barriers to seeing the same primary care provider repeatedly.

The lesson for ACOs is to be more aware of these barriers, and to attempt to reduce them in the name of saving money and better serving patients.


Higher costs are associated with ACOs that have a higher percentage of patients with primary care services that aren't received in-network. These higher costs are driven largely by outpatient care, emergency room visits and skilled nursing facilities. For each additional percentage-point increase in ACOs' out-of-network primary care visits, the ACO paid about $43 a year more per patient.

This cost increase may be because primary care providers act as gatekeepers. As providers, they manage referrals to potentially high-cost services, and when in-network, are more likely to provide more cost-effective care.

Policymakers could help reduce leakage by supporting primary care providers, authors said, and putting more focus on their vital role in the healthcare system.


Data published in October 2019 shows that physician-led ACOs in the Medicare Shared Savings Program outperformed hospital-led ACOs -- and not by a little, but by a significant margin. And MSSP ACOs continue to achieve higher savings the longer they participate in the program.

The MSSP is Medicare's largest alternative payment model, and seeks to transition Medicare away from fee-for-service payment into a new value-based framework. In 2018, 548 MSSP ACOs provided care to more than 10 million Medicare beneficiaries and reduced Medicare spending by $739 million.

Twitter: @JELagasse

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