ACOs don't cut costs, study finds

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Accountable care organizations don't lower costs, and may actually raise them, according to a study published in the Journal of General Internal Medicine.

The Aug. 13 study evaluated financial performance data from all four CMS ACO programs from 2005 to 2018. The researchers — Kip Sullivan, member of the advisory board of Health Care for All Minnesota, and James Kahn, MD, emeritus professor of health policy at the University of California San Francisco — looked at net cost to CMS, or gross savings in medical billing minus bonus payments to ACOs.

What the study authors found is overall, ACOs largely broke even. When CMS subtracted bonuses from gross savings, the ACOs either lost or saved a few tenths of a percent.

The researchers said they "omitted ACO overhead costs, which are not reported. While they do not affect CMS net costs, they do influence provider costs. MedPAC estimates overhead for ACO programs at 2 percent of Medicare spending. If ACOs save CMS and providers at most a few percent, this implies that ACOs are actually raising systemwide costs." 

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