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An Analysis of Medicare Accountable Care Organization Expense Reports

Catherine Hersey, Betty Fout, and Matt Trombley, Abt Associates; Lauren Scarpati, Gusto; and J Michael McWilliams, Harvard University

Article

December 3, 2021

Accountable Care Organizations (ACOs) are groups of healthcare providers who team up to provide high quality coordinated care. In 2015, the Centers for Medicare and Medicaid Services developed the ACO Investment Model (AIM) to encourage the formation of Shared Savings Program ACOs in rural and underserved areas by providing up-front and ongoing payments to participating ACOs. Abt Associates analyzed expense report data submitted by AIM ACOs to understand how they chose to invest those payments—the types of expenses reported, the broad areas that ACOs chose to prioritize with investments, and the specific strategies in which ACOs invested.

Abt found ACOs made the most substantial investments in care coordinators and managers, health information technology, and management staff. More than half of ACO investments focused on care coordination and management strategies, rather than, for example, transforming care delivery through provider education and practice redesign. Abt was also able to estimate model participation costs, with about 3 percent of reported spending attributable to meeting program participation requirements such as quality reporting and compliance activities. However, and perhaps most notably, after applying individual ACO invesments to prior estimates of net Medicare savings, Abt found a net societal benefit of $209 million.

Read more about Abt’s work on ACO AIM.