Preliminary results for the first year of Medicare’s two accountable care organization (ACO) programs indicate that the new model for care delivery and payment can be an effective way to rein in health care costs while improving quality.
During the first 12 months of the Medicare Shared Savings program, 54 of 114 ACOs that participated in 2012 achieved lower expenditures than originally projected, according to a recent announcement by the Centers for Medicare & Medicaid Services (CMS). Nearly 30 of these ACOs generated savings of more than $126 million.
As the name implies, groups participating in this program are able to share in financial savings when they lower the growth of health care costs while meeting standards for high-quality care. In this model, reduced costs are expected in aggregate over the long run.
“Our experience has shown that ACOs can increase quality while lowering costs,” said Kenneth W. Wilkins, Jr., MD, president of Coastal Caroline Health Care, which is participating as a Medicare ACO. “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.”
In the Pioneer ACO program, which is designed for health care organizations that are prepared to take on greater financial risk, nine of the 23 participating groups “significantly” lowered their spending growth in comparison to the traditional Medicare fee for service model.
These initial results are an important milestone, considering even many large, sophisticated health care systems said they would be unable to participate in the Medicare ACO program as it originally was proposed in 2011. The start-up costs were too high, the requirements too burdensome and the financial risk unaffordable.
But CMS responded to the AMA’s recommendations for revisions that would make participation viable for physicians in all practice sizes. The final rule for the new program included provisions that offered up-front payments for physician-led ACOs, reduced financial risks and allowed the groups to share in cost savings early on.
Meanwhile, the AMA is working to shape new delivery and payment models in a way that enhances practice sustainability and physician satisfaction—regardless of the practice size. As part of this strategic focus area, the AMA is developing practice-level solutions that will advance the practice of medicine and help physicians make informed decisions about their practice environments.
