Accountable care organizations (ACOs) are using patient segmentation to maintain quality of care while cutting costs associated with treating high-need, high-cost patients, such as hospice patients, according to a January report from the Commonwealth Fund.

The report comes at a time when hospices and ACOs are exploring opportunities for greater collaboration. For example, VITAS Healthcare, the largest hospice provider in the United States, has begun offering services tailored specifically for the quality and cost saving needs of ACOs, according to the company’s website.

Another leading hospice provider, Kindred Healthcare, is part owner of the Silver State ACO in Las Vegas. Insurance company Humana and two private equity firms acquired Kindred during 2018.

“Both hospice and palliative care have been shown to reduce costs and improve the patient experience, making them potentially powerful tools in an ACO’s arsenal,” concluded Assistant Professor of Health Policy Julia Driessen of the University of Pittsburgh and Turner West, associate vice president of Bluegrass Care Navigators, in a March 2018 study published in the Journal of Palliative Care Medicine.

Patient segmentation refers to the practice of dividing up the pool of patients based on shared characteristics, each segment requiring different planning for resources, care arrangements, and service delivery.

“It is theorized that segmentation will allow ACOs to better match patients to appropriate interventions, enabling them to provide higher-quality care and allocate limited resources more effectively,” the report said.

Among the ACOs examined by Commonwealth Fund for its report, hospice care was a common subgroup of high-need, high-cost patient segments. Some ACOs placed hospice patients in an “advanced illness” category that also included palliative care patients.

Established by the Affordable Care Act, ACOs are groups of health care providers who coordinate the care they provide for Medicare patients with the goals of improving quality and minimizing costs. Hospices are eligible to participate in ACOs through the Medicare Shared Savings Program (MSSP). According to CMS, the goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

“End-of-life (EOL) care is ripe for transformation by accountable care organizations (ACOs), which have the right incentives to tackle the widespread variation in use, quality, and costs that now characterize health care at the end of life,” Driessen and West said in a blog for the journal Health Affairs.