Medicare ACO Pilot Nets $400 Million In Savings, Due For Expansion
By Jof Enriquez,
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A pilot alternative payment program called Pioneer Accountable Care Organizations (ACO) has saved Medicare approximately $400 million over the first two years of implementation. Independent actuaries have verified the cost savings of the program, which will likely be expanded to cover more Medicare beneficiaries.
“This is a crucial milestone in our efforts to build a health-care system that delivers better care, spends our health-care dollars more wisely, and results in healthier people,” Health and Human Services (HHS) Secretary Sylvia M. Burwell said in a statement, per the Wall Street Journal.
An ACO is a group of health providers that opt to receive a lump sum payment from Medicare for their services. This is in contrast to the traditional fee-for-service payment model, where they receive payments for every test or procedure rendered. Value-based models such as ACOs under Obamacare aim to lower healthcare spending yet improve patient outcomes.
Under the Pioneer ACO program, 32 participating hospitals agreed to split cost savings with Medicare if they meet certain metrics. However, just 13 hospitals qualified to share savings in the first year, and only 11 shared incentives in the second year, according to the WSJ. Two health organizations paid millions in penalties for failing to meet quality targets. Thirteen of the 32 original hospitals have since dropped out of the Pioneer ACO program.
According to the federal study published online in the Journal of the American Medical Association (JAMA), patients under the Pioneer ACO program saved $36 per month on average in 2012 and $11 per month in 2013 than non-affiliated patients. Eligible patients were also found to have fewer hospital stays, better coordination with providers, and lesser utilization of unnecessary procedures and tests.
“The Affordable Care Act gave us powerful new tools to test better ways to improve patient care and keep communities healthier,” HHS secretary Sylvia Mathews Burwell said in a statement, per The Hill. “The Pioneer ACO Model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large."
Approximately 600,000 Medicare beneficiaries were enrolled in the Pioneer ACO pilot program. The independent Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) has already certified it to be expanded, according to The Hill.
Nationwide, there are more than 3.5 million Medicare beneficiaries participating in ACOs run by some 400 health systems, the WSJ reports. CMS plans to link up to 50% of Medicare payments to value-based models like ACOs by 2018.
“This gives CMS greater confidence in scaling elements of the model to benefit people across the nation,” Patrick Conway, a senior CMS official, said in a statement. “And we are working to determine the best strategies for embedding the lessons we have already learned from the Pioneer Model into permanent Medicare programs and our nation’s health system.”