ACO Model Reduced Some Low Value Medical Services in First Year

Aaron L. Schwartz, PhD Department of Health Care Policy Harvard Medical School Boston, Massachusetts Interview with:
Aaron L. Schwartz, PhD
Department of Health Care Policy
Harvard Medical School
Boston, Massachusetts  

Medical Research: What is the background for this study? What are the main findings?

Dr. Schwartz: It is widely believed that much health care spending is devoted to services that provide little or no health benefit to patients. In previous work, we demonstrated that low-value services were commonly delivered to the Medicare population. In this study, we examined whether a new form of paying physicians and hospitals was effective in discouraging the use of low-value services.

The payment reform we studied was the Medicare Pioneer Accountable Care Organization (ACO)  Program, a feature of the Affordable Care Act. This program financially rewards health care provider groups who keep spending under a specified budget and achieve high performance on measures of quality of care. This voluntary program employs a similar ACO payment model that some private insurers have adopted.  The hope is that such models can encourage providers to be more efficient by allowing them to share in the savings generated by lower health care spending. In previous work, we demonstrated that the Pioneer ACO Program was associated with lower overall health care spending and steady or improved performance on health care quality measures. However, it was unclear whether providers were focusing on low-value services in their attempts to reduce spending.

We examined  2009-2012 Medicare claims data and measured the use of, and spending on, 31 services often provided to patients that are known to provide minimal clinical benefit. We found that patients cared for in the ACO model experienced a greater reduction in the use of low-value services when compared to patients who were not served by ACOs. We attributed a 4.5 percent reduction in low-value service spending to the ACO program. Interestingly, this was a greater reduction than the 1.2 percent reduction in overall spending attributed to the program, which suggests that providers were targeting low-value services in their efforts to reduce spending.

In addition, we found that providers with the greatest rate of low-value services prior to the ACO program showed the greatest reduction in these services. We also found similar reductions in service use between services that are more likely to be requested by patients (i.e. early imaging for lower-back pain) and other services.

Medical Research: What should clinicians and patients take away from your report?

Dr. Schwartz: Physicians are best equipped to know what services are necessary and which are wasteful.  Our study shows that, when providers are given broad incentives to lower spending, they will tend to focus on reducing the use of low-value services. This means that ACO-like payment reforms may be more effective than other reforms that try to influence physician decisions with respect to specific treatments.

Medical Research: What recommendations do you have for future research as a result of this study?

Dr. Schwartz: We only examined one year of the Pioneer ACO program. Additional studies will be needed to assess the long-term effects of policies like this. We believe that understanding how different health care policies affect the use of low-value care is a fertile area for research.


Schwartz AL, Chernew ME, Landon BE, McWilliams J. Changes in Low-Value Services in Year 1 of the Medicare Pioneer Accountable Care Organization Program.JAMA Intern Med. Published online September 21, 2015. doi:10.1001/jamainternmed.2015.4525.

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Aaron L. Schwartz, PhD (2015). ACO Model Reduced Some Low Value Medical Services in First Year 

Last Updated on September 24, 2015 by Marie Benz MD FAAD