Association of Medicare Beneficiary and Hospital Accountable Care Organization Alignment With Surgical Cost Savings

IMPORTANCE: Although Medicare accountable care organizations (ACOs) account for half of program expenditures, whether ACOs are associated with surgical spending warrants further study. OBJECTIVE: To assess whether greater beneficiary-hospital ACO alignment was associated with lower surgical episode costs. DESIGN, SETTING, AND PARTICIPANTS: This retrospective cohort study was conducted between 2020 and 2022 using US Medicare data from a 20% random sample of beneficiaries. Individuals 18 years of age and older and without kidney failure who had a surgical admission between 2008 and 2015 were included. For each study year, distinction was made between beneficiaries assigned to an ACO and those who were not, as well as between admissions to ACO-participating and nonparticipating hospitals. EXPOSURES: Time-varying binary indicators for beneficiary ACO assignment and hospital ACO participation and an interaction between them. MAIN OUTCOMES AND MEASURES: Ninety-day, price-standardized total episode payments. Multivariable 2-way fixed-effects models were estimated. RESULTS: During the study period, 2 797 337 surgical admissions (6% of which involved ACO-assigned beneficiaries) occurred at 3427 hospitals (17% ACO participating). Total Medicare payments for 90-day surgical episodes were lowest when ACO-assigned beneficiaries underwent surgery at a hospital participating in the same ACO as the beneficiary ($26 635 [95% CI, $26 426-$26 844]). The highest payments were for unassigned beneficiaries treated at participating hospitals ($27 373 [95% CI, $27 232-$27 514]) or nonparticipating hospitals ($27 303 [95% CI, $27 291-$27 314]). Assigned beneficiaries treated at hospitals participating in a different ACO and assigned beneficiaries treated at nonparticipating hospitals had similar payments (for participating hospitals, $27 003 [95% CI, $26 739-$27 267] and for nonparticipating hospitals, $26 928 [95% CI, $26 796-$27 059]). A notable factor in the observed differences in surgical episode costs was lower spending on postacute care services. CONCLUSIONS AND RELEVANCE: In this cohort study evaluating hospital and beneficiary ACO alignment and surgical spending, savings were noted for beneficiaries treated at hospitals in the same ACO. Allowing ACOs to encourage or require surgical procedures in their own hospitals could lower Medicare spending on surgery.