Out-Of-Network Primary Care Is Associated With Higher Per Beneficiary Spending In Medicare ACOs

Abstract

Despite expectations that Medicare accountable care organizations (ACOs) would curb health care spending, their effect has been modest. One possible explanation is that ACOs' inability to prohibit out-of-network care limits their control over spending. To examine this possibility, we examined the association between out-of-network care and per beneficiary spending using national Medicare data for 2012-15. While there was no association between out-of-network specialty care and ACO spending, each percentage-point increase in receipt of out-of-network primary care was associated with an increase of $10.79 in quarterly total ACO spending per beneficiary. When we broke down total spending by place of service, we found that out-of-network primary care was associated with higher spending in outpatient, skilled nursing facility, and emergency department settings, but not inpatient settings. Our findings suggest an opportunity for the Medicare program to realize substantial savings, if policy makers developed explicit incentives for beneficiaries to seek more of their primary care within network.

Keywords: Accountable care organizations; Beneficiaries; Costs and spending; Health policy; Health reform; Medicare; Medicare savings programs; Primary care; Primary care providers; Specialty care; Traditional Medicare.

Exhibit 1.

Median and Interquartile Range of Percent of Primary Care and Specialty Care Delivered Out of Network for Medicare Shared Savings Program Accountable Care Organizations by Year (2012–2015) Source: Authors’ analysis of 2012–2015 Medicare Claims

Exhibit 3.

Association between Percentage Point Increase in Out-of-Network Primary Care and Specialty Care and Per-Beneficiary-Per-Quarter Spending, by Spending Category Source: Authors’ analysis of 2012–2015 Medicare Claims Notes: Bars indicate marginal effect of percentage point increase in out-of-network care on spending category. One model was run for each spending category. Models include ACO and quarter-year fixed effects and the following controls (not shown): sex, race, age, Medicare/Medicaid dual eligibility, Hierarchical Condition Categories (HCC), whether the beneficiary was a new Medicare enrollee, percent of ACO providers that were primary care providers, number of beneficiaries (based on number of beneficiaries in sample), number of providers, ACO leadership (hospital, physician, or joint), whether the ACO included a critical access hospital, federally qualified health center, and/or acute care hospital, ACO risk-bearing status (1-sided or 2-sided), number of Primary Care Providers, MDs, and skilled nursing facilities in county, county population, and county median per capita income; *p<0.10, **p<0.05; ***p<0.01, ****p<0.001