Out-of-Network Primary Care Linked to Higher ACO Costs

Patients receiving primary care outside of their defined accountable care organization (ACO) network drive up costs for ACOs, a recent study from Portland State University said.

The Medicare Shared Savings program sparked the growth of ACOs. These payment models intend to reduce healthcare costs while improving patient care through care coordination among a network of participating providers.

Those involved in the model work to keep patients in the network of providers, usually emphasizing primary care services. ACOs want to reduce healthcare costs by eliminating unnecessary emergency department utilization and by caring for problems in primary care when appropriate rather than pointing patients to costly specialists. ACOs also emphasize addressing the social determinants of health to help the route cause of a patient’s medical challenges.

If the ACO can effectively lower the costs of care while maintaining or improving quality, they share savings with CMS or their private payer partner.

But for every one percentage point increase in an ACO’s out-of-network primary care visits rate, the ACO paid an extra $43 a year per patient, the study published in Health Affairs showed. 

"Primary care has the potential to unlock the key to reducing healthcare costs," said Sunny Lin, PhD, MS, assistant professor at OHSU-PSU School of Public Health and co-author of the study.

Lin and her team found that decreasing an ACO’s out-of-network primary care by one-tenth of a percent could save Medicare $45 million a year. Therefore, expanding ACO primary care networks would help individual ACOs and Medicare at large save immense amounts of money annually.

"What the study found is that it actually didn't matter how much specialty care was received by non-ACO providers," continued Lin. "What mattered more was how well their primary care providers were aligned in the ACO."

Traditionally, out-of-network specialty care was thought to drive healthcare costs. However, study results demonstrate how it is more important for patients to be properly attributed to ACO primary care providers in order to curb costs.

Attributing patients to in-network primary care providers can drive lower costs of care.

These findings highlight one of ACOs' biggest challenges: leakage.

Leakage refers to patients seeking care outside of their ACO network. Because these providers are not involved in the ACO shared savings agreement, their costs of care are often higher. Care is not as well coordinated out-of-network, so patients risk repeating tests or receiving delayed care. 

Results showed that leakage was higher in communities with patients of color. Study authors hypothesized this is because these communities typically have more challenges pertaining to continuity of care and access to care.

"ACOs need to be cognizant of these barriers and try to find ways to reduce them in order to save money -- and more importantly better serve their patients," Lin emphasized.

The study team used Medicare data from over one million patients between 2012 and 2015 to understand the costs of care. Secondary results showed that higher costs were also associated with increased utilization of outpatient care, emergency department visits, and skilled nursing facility admissions.

Policymakers should promote more robust resources for primary care and advocate for ACOs to expand their networks, Lin advised.

Primary care plays a critical role in the ACO payment model. If these models are to continuing lowering the costs of care while improving patient outcomes, they need to expand their primary care provider networks.