Medicare saved more than $380 million in 2012 through Medicare Accountable Care Organization (ACO) initiatives, Pioneer ACOs, Physician Group Practice demonstrations, and expanded participation in the Bundled Payments for Care Improvement Initiative.
The Centers for Medicare & Medicaid Services (CMS) announced the savings on January 30, 2014, in an interim financial report. On the same day, the agency also announced a big expansion of Bundled Payments Initiative.
Health and Human Services Secretary Kathleen Sebelius said the findings demonstrate that “organizations of various sizes and structures across the country are working with their physicians and engaging with patients to better coordinate and deliver high quality care while reducing expenditure growth.”
Medicare Shared Savings Program
The results for the Medicare Shared Savings Program ACOs show that, in their first 12 months, nearly half (54 out of 114) of the ACOs that started program operations in 2012 already had lower expenditures than projected. Of the 54 ACOs that exceeded their benchmarks in the first 12 months, 29 generated shared savings totaling more than $126 million.
In addition, these ACOs generated a total of $128 million in net savings for the Medicare Trust Funds. ACOs share with Medicare any savings generated from lowering the growth in health care costs while meeting standards for high quality care.
Kenneth Wilkins, M.D., president of Coastal Carolina Health Care said their experience has shown that ACOs can increase quality while lowering costs. “As a result of the programs we’ve initiated, our patients have experienced better access to their primary care physician, higher quality measures, and fewer trips to the hospital.” John Chessare, M.D., president and CEO of the Greater Baltimore Center Healthcare System said the Shared Savings Program is a “tangible reminder of the historic transformation taking place in our health care system.”
Pioneer ACOs
An independent preliminary evaluation of the Pioneer ACO Model—the ACO model designed for more experienced organizations prepared to take on greater financial risk—also released data which shows Pioneer ACOs generated gross savings of $147 million in their first. Results showed that of the 23 Pioneer ACOs, 9 had significantly lower spending growth relative to Medicare fee for service while exceeding quality reporting requirements. These savings far exceed findings from a previous analysis conducted by CMS, which used a different methodology.
Barbara Walters, M.D., executive medical director for accountable care, with the Dartmouth-Hitchcock ACO, said she was encouraged by these results. “Our strategies of using patient outreach and education and regular follow up for targeted chronic disease programs are allowing us to anticipate patient needs before their health problems become worse.”
Physician Group Practice Demonstration
CMS also released results for the Physician Group Practice Demonstration initiatives, which offered incentive payments for delivering high-quality, coordinated health care that generates Medicare savings. Those results confirmed, according to CMS, overall savings over the 5 year experience with 7 out of 10 physician group practices earning shared savings payments for improving the quality and cost efficiency totaling $108 million over the course of the Demonstration.
Big Bundled Payments Expansion
In addition to announcing the ACO cost savings, CMS also announced that 232 acute care hospitals, skilled nursing homes, physician group practices, long-term care hospitals, and home health agencies have entered into agreements to participate in the Bundled Payments for Care Improvement Initiative. Bundling payment for services that patients receive across a single episode of care, such as heart bypass surgery or a hip replacement, is one way to encourage doctors, hospitals and other health care providers to work together to better coordinate care for patients, both when they are in the hospital and after they are discharged.
The agency says this is the largest and most ambitious test ever of a bundled payment model in Medicare or any other payer in the U.S. Through this initiative, made possible by the Affordable Care Act, CMS will test how bundled payments for clinical episodes can result in more coordinated care for beneficiaries and lower costs for Medicare.
Final performance year-one results will be released later this year.
