Changes in Health Care Spending and Quality for Medicare Beneficiaries Associated With a Commercial ACO Contract

IMPORTANCE: In a multipayer system, new payment incentives implemented by one insurer for an accountable care organization (ACO) may also affect spending and quality of care for another insurer's enrollees served by the ACO. Such spillover effects reflect the extent of organizational efforts to reform care delivery and can contribute to the net impact of ACOs. OBJECTIVE: We examined whether the 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. DESIGN, SETTING, AND PARTICIPANTS: Quasi-experimental comparisons from 2007-2010 of elderly fee-for-service Medicare beneficiaries in Massachusetts (1, 761, 325 person-years) served by 11 provider organizations entering the AQC in 2009 or 2010 (intervention group) vs beneficiaries served by other providers (control group). Using a difference-in-differences approach, we 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. MAIN OUTCOMES AND MEASURES: The primary outcome was total quarterly medical spending per beneficiary. Secondary outcomes included spending by setting and type of service, 5 process measures of quality, potentially avoidable hospitalizations, and 30-day readmissions. RESULTS: Before entering the AQC, total quarterly spending per beneficiary for the intervention group was 150 (95% CI, 25-274) higher than for the control group and increased at a similar rate. In year 2 of the intervention group's exposure to the AQC, this difference was reduced to 51 (95% CI, -109 to 210; P =. 53), constituting a significant differential change of -99 (95% CI, -183 to -16; P =. 02) or a 3. 4% savings relative to an expected quarterly mean of 2895. Savings in year 1 were not significant (differential change, -34; 95% CI, -83 to 16; P =. 18). Year 2 savings derived largely from lower spending on outpatient care (differential change, -73; 95% CI, -97 to -50; P <. 001), particularly for beneficiaries with 5 or more conditions, and included significant differential changes in spending on procedures, imaging, and tests. Annual rates of low-density lipoprotein cholesterol testing differentially improved for beneficiaries with diabetes in the intervention group by 3. 1 percentage points (95% CI, 1. 4-4. 8 percentage points; P <. 001) and for those with cardiovascular disease by 2. 5 percentage points (95% CI, 1. 1-4. 0 percentage points; P <. 001), but performance on other quality measures did not differentially change. CONCLUSIONS AND RELEVANCE: The AQC was associated with lower spending for Medicare beneficiaries but not with consistently improved quality. Savings among Medicare beneficiaries and previously demonstrated savings among BCBS enrollees varied similarly across settings, services, and time, suggesting that organizational responses were associated with broad changes in patient care.