Outpatient Care Patterns and Organizational Accountability in Medicare

By J. Michael McWilliams, MD, PhD; Michael E. Chernew, PhD; Jesse B. Dalton, MA; Bruce E. Landon, MD, MBA, MSS
JAMA Internal Medicine, April 21, 2014

In this study of 145 organizations participating in the Medicare ACO programs, over one-third of beneficiaries attributed to an ACO in 2010 or 2011 was not assigned to the same ACO in both years. Thus, in any given year, a substantial share of patients for whom an ACO is held accountable may be newly or transiently assigned. Although healthy beneficiaries using little primary care contributed to this instability, unstably assigned beneficiaries were more likely than stably assigned beneficiaries to be in several high-cost groups that may be targeted for care management, including the top decile of total spending.

Much of the outpatient specialty care for patients assigned to ACOs, particularly higher-cost patients with more office visits and chronic conditions, was provided by specialists outside of patients’ assigned organizations, even among more specialty-oriented ACOs. In contrast, leakage of office visits with PCPs for ACO-assigned patients was minimal. In addition, less than 40% of outpatient Medicare spending billed by ACO physicians was for care provided to beneficiaries assigned to the billing ACO. This percentage was much lower for specialty-oriented than for primary care–oriented organizations, suggesting that ACOs currently provide substantial amounts of specialty care to patients receiving primary care elsewhere. Thus, at least initially, incentives in traditional Medicare for organizations participating in ACO programs may continue to be largely fee-for-service in nature, particularly for outpatient specialty care.


In this study of Medicare Accountable Care Organizations (ACO), 66.7% of office visits with specialists were provided outside of the assigned ACO, especially for higher-cost patients with more office visits and chronic conditions. That hardly represents a model designed to control costs.

Some suggest that tighter relationships need to be established between Medicare patients and ACOs, but that already exists in the Medicare Advantage plans – a model proven to increase costs. It is clear that the nebulous ACO concept has only been a wish on the part of policymakers that physicians and hospitals could somehow organize themselves to provide better, cheaper care. But we now have enough evidence to state that ACOs also are a failure.

The vested interests have indicated that they are going to continue to try to improve the model when it really needs to be replaced. The direction that they are headed is towards more managed care. What we need instead is a financing model that is already proven to reduce waste and improve quality – a single payer national health program. The ACO advocates need a strong dose of disruption, or they will continue leading us down the wrong path.