ACO Status Update

A pilot program created under ObamaCare to change Medicare’s payment system saved almost $400 million and will be expanded, the administration announced Monday. 

An independent report released by the Department of Health and Human Services on Monday finds that the pilot program saved Medicare more than $384 million across 2012 and 2013.

The pilot program, called Pioneer Accountable Care Organizations, is part of an effort to shift Medicare to paying for quality instead of quantity of care.  

Under the program, groups of doctors agree to accept lump payments under Medicare instead of individual payments for each service they provide, as in the traditional Medicare payment system.

 The idea is to discourage unnecessary tests and procedures and better coordinate care. If the groups of doctors, known as Accountable Care Organizations (ACOs), end up keeping costs below the target, they get to keep some of the leftover money, providing an incentive to keep costs down. 

   

The Obama administration is touting the pilot program, claiming it's paid off and generated savings.

 “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. “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.” 

The independent Office of the Actuary of the Centers for Medicare and Medicaid Services (CMS) has now certified that the program can be expanded. It currently applies to about 600,000 Medicare beneficiaries.

The program was not without its bumps. Thirteen of the 32 participating hospital systems dropped out along the way after failing to meet their targets.  

Officials said Monday that two of the ACOs had to pay significant amounts back to Medicare. That is because the incentives in the program work both ways, meaning if costs come in too high, they have to pay penalties. 

Earlier this year, the Obama administration announced the goal of tying 30 percent of Medicare payments to programs like ACOs by 2016, and 50 percent by 2018.  

Officials painted Monday’s announcement as a step toward that goal.

“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.”