The Impact of ACOs on Disparities

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Recent US health care payment policies have focused on improving quality of care while constraining costs. One prominent example is the formation of Accountable Care Organizations (ACOs). ACOs are networks of health care providers that take on responsibility for managing the health of a group of patients across the full continuum of health care settings and providers, and are held financially accountable for providing high-quality and low-cost care. ACOs are one of the most important and far-reaching recent changes to health care, with exponential growth over the past four years, covering over 28 million lives by 2016. Early evidence lends support to the premise that ACOs can improve quality while constraining costs. However, there is concern that ACOs could widen existing health care disparities. On one hand, socially vulnerable groups (such as racial and ethnic minorities and patients living in impoverished neighborhoods) have much to gain from ACOs, as they have a higher prevalence of many chronic health conditions, receive worse quality of care, and experience worse health outcomes. On the other hand, ACOs face a number of challenges in meeting the needs of vulnerable populations. First, early ACOs may be located in areas with lower poverty rates. Providers forming ACOs tend to be large, financially well-off group practices, systematically excluding providers who serve a disproportionate share of vulnerable patients, and resulting in poor access of vulnerable patients to ACO providers. Second, because many vulnerable patients are chronically ill, high-cost patients whose outcomes could worsen quality and cost metrics used to evaluate ACOs, ACO physicians may avoid caring for them, resulting in reduced attribution of vulnerable patients to ACO providers. Third, ACOs may be ill equipped to provide high-quality care to vulnerable groups because of the diverse needs of these complex patients, resulting in increased disparities in patient outcomes. It is unknown whether ACOs will effectively serve vulnerable patients and there is increasing concern that ACO implementation will worsen disparities. Our aims are to: (1) examine physician participation in ACOs in relation to the proportion of vulnerable patients in a region or practice; (2) examine changes in share of vulnerable patients in physicians' patient panels in relation to ACO participation; (3) examine the effect of ACOs on disparities in quality (including preventive care, chronic disease management, unnecessary ER visits, hospitalizations, and readmissions) and costs of care (Medicare payments); and (4) explore heterogeneity in the effects of ACOs on disparities in care across physician groups that differ in practice characteristics. We do so using a unique dataset with detailed information on provider participation in Medicare ACOs, merged with national Medicare claims data measuring quality of care and costs for both enrollees and non-enrollees. Results from this study will provide empirical evidence of the effect of ACOs on disparities in care and provide guidance on how to alter current ACO policy to reduce disparities in order to maximize the positive effects of reform payment.