Mixed Results for Medicare ACOs

Published Online: January 31, 2014
Katie Sullivan
The Centers for Medicare & Medicaid Services (CMS) reports that accountable care organizations (ACOs) that participated in its Shared Savings program during 2012 saved $380 million in health spending. However, more than half of the 114 participating organizations did not produce any savings.   

“Overall, the ACO program's a net saver to the Medicare program,” said Jon Blum, CMS principal deputy administrator. “It's giving us great confidence that this is the right course for the Medicare program and we are confident that it will continue to show quality improvement and cost savings.”

ACOs operate under a pay-for-performance reimbursement model. It only rewards healthcare providers who achieve certain quality and health spending benchmarks. Team-based incentives built into the model aim to drive providers away from the traditional fee-for-service model.

Some feel the findings demonstrate there is still a mass of work to be done to reform the US healthcare system.

“Today's report reflects important steps. More work is needed to modernize our antiquated Medicare payment system and base payment on evidence-based quality measures and proven patient outcomes,” said Dr John Noseworthy, chief executive of the Mayo Clinic in Rochester, Minnesota. “As results of the team-based care models are analyzed, those most effective in driving down healthcare costs without compromising safety and quality should become part of the healthcare system.”

The Hackensack Alliance ACO in New Jersey was 1 of those successful ACOs. The organization told The American Journal of Accountable Care, a publication under The American Journal of Managed Care network, that it expects to receive a bonus payment of $10 to $15 million based on exceeding performance measures in the first 12 months. “In the first 5 quarters we have saved in excess of $14.5 million,” Dr Morey Menacker, president and chief executive officer of Hackensack Alliance ACO, said in the article. “We’ve really made a difference.”

Currently there are 360 ACOs across the country serving an estimated 5.3 million Medicare beneficiaries. Despite the mixed evidence on the program’s success, about 100 ACOs have been established each year since the program’s implementation in 2010 as part of the Affordable Care Act.  
Around the Web
Providers Net Uneven Results from ACO Experiment [Modern Healthcare]

ACOs Saving Some Money, But Medicare Is Short On Details [Kaiser Health News]

US Says Results Encouraging for Healthcare Delivery Reforms [Reuters]

New Care Organizations Save $380 Million in First Year [USA Today]