Medicare Achieves Significant Savings, Quality
Improvements from Delivery System Initiatives
Medicare Accountable Care Organizations, Pioneer ACOs
save $380 million
30, 2014 - Today, the Centers for Medicare & Medicaid Services
(CMS) released findings on a number of its initiatives to reform the
health care delivery system. These include interim financial results
for select Medicare Accountable Care Organization (ACO) initiatives, an
in-depth savings analysis for Pioneer ACOs, results from the Physician
Group Practice demonstration, and expanded participation in the Bundled
Payments for Care Improvement Initiative. Savings from both the
Medicare ACOs and Pioneer ACOs exceed $380 million, CMS says.
“These innovative programs are showing encouraging
initial results, while providing valuable lessons as we strive to
improve our nation’s health care delivery system,” HHS Secretary
Kathleen Sebelius said.
“Today’s 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.”
While ACOs are designed to achieve savings over
several years, not always on an annual basis, the interim financial
results released today 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
Of the 54 ACOs that exceeded their benchmarks in the
first 12 months, 29 generated shared savings totaling more than $126
million – a strong start this early in the program. 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. Final performance year-one results will be released
later this year.
Editor’s Note: There are over 360
Accountable Care Organizations working with Medicare to provide
higher-quality coordinated care for seniors. Doctors, hospitals and health care
providers establish ACOs to work together to provide better health care, while working to
slow the growth of health care cost.
By Jessie Gruman,
President, Center for Advancing Health
While evaluation of the program’s overall impact is
ongoing, the interim results are currently within the range originally
projected for the program’s first year. A great majority of the
program’s overall net impact was projected to phase-in over the
program’s ensuing performance years. Moreover, through regular
webinars; tools for sharing information and best practices;
opportunities for ACOs to connect with one another; and other
activities, ACOs are being provided the infrastructure and resources to
learn from one another and to then diffuse what’s working and what is
“Our 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,” said Dr. Kenneth W. Wilkins, president of Coastal Carolina
“We look forward to making continued progress and seeing
future results, and we are grateful to CMS whose advance funding made
these initiatives possible.”
“We are delighted to be participating in the Shared
Savings Program because of its goal to reduce costs while simultaneously
increasing the quality of care and services we provide to our patients
and community,” said Dr. John B. Chessare, president and chief executive
officer of the Greater Baltimore Medical Center (GBMC) HealthCare
system. “The Shared Savings Program is a tangible reminder of the
historic transformation taking place in our health care system and we
are pleased to be a part of it.”
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
today shows Pioneer ACOs generated gross savings of $147 million in
their first year while continuing to deliver high quality care. Results
showed that of the 23 Pioneer ACOs, nine 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.
“We are still early on in the program, but are
encouraged by these results and are on track to meet our goals for
participation in the Pioneer Accountable Care Organization Model”, said
Dr. Barbara Walters, executive medical director for accountable care,
with the Dartmouth-Hitchcock ACO.
“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. Involvement in the Pioneer Model is
helping us provide better treatment for our patients across a wide-range
of health challenges.”
CMS also released results today for the Physician
Group Practice Demonstration initiatives, which offered incentive
payments for delivering high-quality, coordinated health care that
generates Medicare savings.
The Physician Group Practice Demonstration
evaluation report confirmed 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. The participating
organizations consistently demonstrated high quality of care on a broad
range of chronic disease and preventive care measures.
The above models represent just a few initiatives
CMS is testing to improve the quality of care delivery, while lowering
Today, CMS 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.
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.
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