A rapidly expanding healthcare delivery system that rewards doctors and hospitals for working together to improve quality reaped $411 million in savings for the Medicare health insurance program for the elderly, the Obama administration said.
The Centers for Medicare & Medicaid Services said Tuesday more than 350 accountable care organizations combined to achieve savings in 2014 as the government and private insurers move quickly away from fee-for-service medicine that rewards quantity of care to a value-based proposition that rewards quality and penalizes high costs.
If the providers in the ACO -- an umbrella organization for providers of medical care -- achieve better outcomes, they divvy up money saved with the Medicare program. The program is voluntary and some ACOs have dropped out along the way while others that didn’t achieve quality targets wrote Medicare a check.
But the overall savings and the improvement in quality measures established by the initiative under the Affordable Care Act are signs it’s a model that isn’t going away. And the Obama administration remains committed to it, signing up more ACOs each year.
“These results show that accountable care organizations as a group are on the path towards transforming how care is provided," said CMS Acting Administrator Andy Slavitt. “Many of these ACOs are demonstrating that they can deliver a higher level of coordinated care that leads to healthier people and smarter spending.”
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The government-led program works with Medicare contracting with doctors and hospitals through an ACO which, in turn, pushes high quality, less expensive care rather than today’s payment system that often leads to excessive care by paying for each treatment or procedure that isn’t always better. The providers in an ACO are responsible for managing the care of the health plan enrollees and are financially rewarded if the enrollees, or patients, stay out of the more expensive hospital.
While most of the ACOs in the voluntary program are only in their second year of results, 33 so-called Pioneer ACOs in their third year showed improvements in 28 of 33 quality measures and were therefore awarded for it financially.
Not all of the ACOs are achieving savings, however. Pioneer ACOs generated $120 million in savings, a 24% increase from the $96 million saved in their second performance year. There were 15, less than half of the pioneers that achieve savings, according to the government’s report.
The government continues to sign on more ACOs. More than 420 Medicare ACOs have contracts with the government and more than 7.8 million Americans were receiving care via these entities as of January 1 of this year.
Insurers are shifting tens of billions of dollars in payments to doctors and hospitals through ACOs with
Those working with providers say doctors and hospitals are slowly getting comfortable with value-based payment and ACOs. The new report from Medicare documenting savings gives their provider clients optimism, companies working with doctors and hospitals say.
“This is hard work but our physician partners are getting increasingly comfortable with these activities and we now have tangible proof of the positive impact they are bringing to the quality of care and healthcare costs for Medicare beneficiaries,” Richard Barasch, chief executive officer of Universal American, a management services firm that works with doctors on their value-based care arrangements. “We are also encouraged by the commitment shown by CMS to the Medicare ACO program in the final rule for 2016 and beyond.”
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