Physician Behavior in Accountable Care Organizations

Accountable Care Organizations (ACOs) are an evolving form of capitated payment in which payers reimburse groups of providers conditionally on quality and cost benchmarks set for populations of patients. Despite widespread and increasing adoption, the effects of ACO style contracts on physician behavior are not well understood. Early findings indicate the potential for ACO reimbursement to improve quality while maintaining or reducing expected spending. However, work to date has been limited to early Medicare program adopters or a single commercial ACO (McWilliams et al., 2015; Song et al., 2014; Nyweide et al., 2015). Study of ACO contracts at the physician level is of additional relevance due to the physician’s role as an upstream referral source. Mostashari and coauthors have noted that physicians, and in particular primary care physicians, have stronger financial incentives than hospitals or health systems to reduce health care costs outside of their own physician group (Mostashari, Sanghavi, and McClellan, 2014). Through the combination of a national physician database from SK&A with Medicare annual physician claim summaries and a commercial claims database provided by three large U.S. insurers through the Health Care Cost Institute (HCCI), ongoing work seeks to estimate the effects of a broad and geographically varied set of commercial and Medicare ACOs on physician treatment behavior.

Specifically, difference-in-differences style regressions estimate the effects of ACO participation on a series of claims-based process and outcome measures collected from 2009 to 2014. SK&A has collected a unique dataset of public and commercial ACO physician affiliations previously unavailable to researchers. Maintained through a continuously updated phone survey of all U.S. office-based physicians, as of 2014 the data show over 25 percent of all physicians to be participating in either a Medicare or commercial ACO contract. Analyses to date have focused on the effects of Medicare ACO adoption on physician Part B billing summaries for 2012 and 2013 as well as referrals to other providers from 2009 – 2014. “Treatment” metrics developed from billed HCPCS codes include changes in evaluation and management (E&M) visits, diagnostics such as imaging and blood work, and use of invasive surgical procedures.

Preliminary findings indicate that physicians participating in ACOs reduced total billed procedures, with statistically significant decreases in the number of imaging tests and non-new E&M visits. Highlighting potential antitrust concerns surrounding ACOs, preliminary results utilizing public use Medicare physician-to-physician referral data indicate that physicians in Medicare ACOs significantly increased rates of referrals (in terms of both share and total) to members of the same group or system following ACO adoption.  Such research is immediately relevant not only to policy makers, but also the patients, providers, and insurers increasingly participating in such arrangements. Findings will inform the ongoing development of both public and commercial ACOs through identification of likely physician responses to changed incentive schemes.