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Insights

Jan 31, 2014

ACOs are a “Long-Term” Measure to Achieve Medicare Savings

Published

Jan 31, 2014

CMS released financial results on Jan. 30 indicating that nearly half of the Medicare ACOs (54 of 114) had lower expenditures than projected in their first year of participation.

These 54 organizations generated savings totaling more than $126 million.  ACOs, created under the ACA, focus on keeping patients out of the hospital through better coordination of services and increased collaboration among providers.

Results in the Pioneer ACO Program showed that of the 23 member organizations, nine had significantly lower spending growth relative to Medicare fee-for-service while exceeding quality reporting requirements. In the first year of the Pioneer ACO Program, Pioneer ACOs had a small collective impact on total Medicare spending growth, resulting in total Medicare spending per Pioneer ACO-aligned beneficiaries of approximately $20 per beneficiary per month less than it would have been otherwise.

While it is a little premature to judge the ACO model just yet, the interim results are currently within the first year’s projected range.  Moreover, through regular webinars, information sharing tools and other activities, ACOs are provided with the infrastructure and resources needed to learn from one another and to grow.

On Jan. 30, CMS also announced that 232 acute care hospitals, SNFs, physician group practices, LTACHs and home health agencies have entered into agreements to participate in the Bundled Payments for Care Improvement (BPCI) initiative, another CMS initiative to improve delivery and quality of care. 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 providers to work together to better coordinate care for patients, through the entire continuum of care. This is the largest and most ambitious test ever of a bundled payment model in the U.S. Through this initiative, CMS will test how bundled payments for clinical episodes can result in more coordinated care for beneficiaries and lower costs for Medicare.

A successful ACO program accompanied by a successful BPCI program would be a huge positive for the industry. The early results from all of the participating entities show improvement, regardless of savings, and most organizations are performing well in terms of quality and increased healthcare partnerships.   With the number of Medicare ACOs increasing to more than 300 last year, organizations looking to succeed will want to utilize the best practices of the current participating organizations to better assess the challenges and successes associated with becoming an ACO.

CMS will release final year-one performance results later this year.  

To view HHS’ official ACO press release, click here.

Results from the Pioneer Demonstration program were publicly released by CMS in a report published Jan. 30 that was completed in collaboration through an Evaluation Contract led by L&M Policy Research. Avalere Health, Abt Associates, Social & Scientific Systems, and Truven Health Analytics participated in both the qualitative and quantitative analyses included in this report. To read the report that resulted from Avalere’s participation in the Pioneer Evaluation Project, click here.

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