Are ACOs Really Different from HMOs?

Greg Freeman , November 27, 2013

Specifically, the authors examined whether Blue Cross Blue Shield (BCBS) of Massachusetts' Alternative Quality Contract (AQC), an early commercial ACO initiative associated with reduced spending and improved quality for BCBS enrollees, was also associated with changes in spending and quality for Medicare beneficiaries, who were not covered by the AQC.

They also estimated changes in spending and quality for the intervention group in the first and second years of exposure to the AQC relative to concurrent changes for the control group. Regression and propensity score methods were used to adjust for differences in sociodemographic and clinical characteristics. The primary outcome was total quarterly medical spending per beneficiary. Secondary outcomes included spending by setting and type of service, five process measures of quality, potentially avoidable hospitalizations, and 30-day readmissions.

The researchers found that before entering the AQC, total quarterly spending per beneficiary for the intervention group was $150 higher than for the control group and increased at a similar rate. In year two of the intervention group's exposure to the AQC, this difference was reduced to $51, constituting a significant differential change of −$99 or a 3.4% savings relative to an expected quarterly mean of $2,895.

Savings in the first year were not significant, and second-year savings derived largely from lower spending on outpatient care, especially for beneficiaries with five or more conditions. The researchers concluded that the AQC was associated with lower spending for Medicare beneficiaries but not with consistently improved quality.

In another study, researchers found that in five markets around the country, ACOs were providing care to more than half the Medicare patients in the traditional FFS program.2 In addition, ACOs were more likely to be found in markets with greater consolidation by hospitals and doctors.

Researchers with Rand Corporation and Harvard University identified five markets where more than half the traditional Medicare beneficiaries were served by Medicare ACOs, either those participating in the Medicare Pioneer program or the Medicare Shared Savings program. In another 26 hospital markets, Medicare ACOs served up to half of seniors in traditional Medicare, the study found.


1. McWilliams, JM, Landon BE, Chernew ME. Changes in health care spending and quality for Medicare beneficiaries associated with a commercial ACO contract. JAMA 2013;310(8): 829-836.

2. Auerbach DI, Liu H, Hussey PS, et al. Accountable care organization formation is associated with integrated systems but not high medical spending. Health Aff 2013;32:1,781-1,788.

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1 comments on "Are ACOs Really Different from HMOs?"

Robert Burden (12/2/2013 at 12:11 PM)
This is exactly what I would expect someone in his position to say. He needs to look around a bit more. There are ACO like organizations that work on a very different model than the one he discribes and are patient focused. There is more than enough waste and abuse in the system that can be better used in turn to provide all the needed care and still save this nation significant money and improve our health status at the same time. Seems like a very self-serving and uneducated article.




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