Latest results raise questions

Federal officials hailed the uneven results for Medicare's biggest accountable care program as a boost of confidence for the experiment in resetting the way the U.S. delivers and pays for healthcare. But the numbers also raised questions within the industry and among policymakers about why some failed and others did not.

Medicare launched its shared-savings program for accountable care organizations in 2012 under the Patient Protection and Affordable Care Act. That year, 114 organizations entered Medicare contracts that link potential bonuses and losses to their ability to deliver care at lower costs while meeting quality benchmarks. The program has since added another 229 ACOs.

The program has been closely watched and duplicated in arrangements with private payers. But all of these initiatives so far have yielded limited evidence that the model will accomplish its lofty goals: improving health while also slowing the rise in health spending, which until recently has accelerated far faster than the economy.

CMS officials, though, say Medicare's accountable care programs deserve some credit for historically low spending increases. “One thing we have seen in the last four years is unprecedented slowdown in Medicare costs on a per capita basis,” said Jonathan Blum, principal deputy administrator for the CMS, announcing the results. That's in part thanks to the ACA's ACO efforts.

Medicare's first test of accountable care—the Pioneer ACO model launched in January 2012—suffered a setback when nine of the 32 elite organizations selected for the initiative dropped out. Seven switched to the larger, less aggressive shared-savings program.

Among those first 114 ACOs to join that program, 29 reduced Medicare costs enough to keep a share of what Medicare saved, the CMS said last week. They earned bonuses that totaled $126 million, and Medicare will net another $128 million. The remaining 85 ACOs will see no bonus.

Four of the participants that started in 2012 agreed to assume downside risk—meaning they have to return money to Medicare if they exceed spending targets—in return for a larger share of savings. Two of them did not slow spending and may owe the CMS.

Even though so few ACOs were clear winners in the first year, experts said the results reflect the difficulty of the task more than a failure to perform or a flawed program.

“Major organizational changes are required to provide better care for patients,” said Dr. Elliott Fisher, director of the Dartmouth Institute for Health Policy and Clinical Practice and an early ACO proponent. “We have a lot to learn.”

ACOs that successfully reduced costs did so by targeting the most complex patients, Blum said. The investment and planning required to slow health spending, which many ACOs undertook in the first year, will likely produce greater savings in future years, he said. “We're in this for the long term.”

Hackensack (N.J.) Alliance ACO expects to receive a bonus payment of $10 million to $15 million based on its performance in the first 12 months. Dr. Morey Menacker, its president and CEO, attributed the success in part to newly hired nurse navigators who helped reduce hospital stays, readmissions and emergency room visits.

But understanding how and why ACOs did not save money is perhaps more important, said Dr. Kavita Patel, managing director of the Brookings Institution's Engelberg Center for Health Care Reform. “We can learn more from what's happening in the remainder of the organizations,” she said.

Follow Melanie Evans on Twitter: @MHmevans