Accountable care organizations and the diffusion of new surgical procedures

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 DESCRIPTION (provided by applicant): The development and dissemination of new technology is a major determinant of growth in Medicare spending. New biological agents, imaging tests, and devices are among the many sectors of new technology that play a disproportionate role in health expenditures. However, an important contributor to growth in technology spending, and oft underappreciated, is the dissemination of new surgical procedures. Discouraging the dissemination of low value technologies has long been a priority for payers and policymakers. Many hope that accountable care organizations (ACOs) will do just that. A fundamental reform of both Pioneer and Medicare Shared Savings Program ACOs is to unite physicians, hospitals and other caregivers under a single entity to provide more integrated care. Additionally, ACOs imply a considerable change from traditional reimbursement, involving modest financial risk initially, but ultimately resulting in partially capitated payments in some cases. A better understanding of the effects of ACOs on the use of new surgical procedures would be important for anticipating the broader implications of health reform for technology diffusion and cost containment. To examine this issue more carefully, this proposal has three aims. Aim 1: To assess the impact of ACOs on the substitution of surgical technologies for existing therapies. Using national Medicare data, we will determine how health systems substitute new procedures for old ones, focusing in particular on the heterogeneity in effects across technologies according to their value. Aim 2: To measure the impact of ACOs on treatment expansion associated with surgical technologies. Using similar methods, we will assess the extent to which health systems expand the population treated, focusing on the heterogeneity in effects across patients within a procedure. Aim 3: To determine the effect of escalating financial incentives to select ACOs on the use of surgical technologies. We will assess the use of procedures before and after the commencement of partially capitated payments to select ACOs. An improved understanding of the potential impact of ACOs on surgical technology diffusion is central to anticipating future Medicare spending growth. This proposal has real world implications for payers and policymakers as they struggle with designing effective policies to improve the efficiency of the delivery system.