Early results show Heartland Regional's first annual bonus will total roughly $2,861,000, which amounts to 60% of what the hospital's quality and cost-control strategies saved Medicare.
However, as reported in January, that success was not universal. Overall, three out of four organizations failed to earn Medicare bonuses in the first year of their programs. Twenty-nine organizations, including Heartland Regional, will share $128 million in bonus awards.
Despite limited and mixed results, the Medicare program continues to grow and now includes more than 350 organizations. The Shared Savings Program is one of several Affordable Care Act provisions that experiment with new ways to pay doctors and hospitals and is intended to promote efficiency and quality. In late March, the CMS announced deadlines for medical groups and hospitals to enter the next round of ACO contracts, which will begin in January 2015.
Heartland Regional's earnings will cover the hospital's roughly $2 million first-year investments in new care management, data analytics staff and new software to aid clinicians, said Heartland Regional's administrator, Linda Bahrke. Returns are expected to increase as earlier investments pay off and new strategies do more to reduce spending, but Bahrke added that it was the hospital's decision five years ago to employ nurse and social-worker care managers to work with patients outside the hospital that first positioned Heartland Regional to succeed.
Even before the accountable care organization was created, more than a dozen care managers met with patients in their homes and communities under Heartland Regional's existing program, she said. Entry into the Shared Savings Program expanded that effort to include another 18 care managers working with doctors and patients in outpatient clinics, as the ACO began to target efforts to the 15% of its patients who are high-risk and complex.
Additionally, information technology investments—including three new employees who exclusively analyze patient data—created new electronic medical record alerts that doctors see immediately when they first treat ACO patients.
Now the system is developing criteria to identify the most high-quality, cost-efficient specialty and post-acute providers. That information will be distributed to primary care doctors who make referrals. “It will be selection of the fittest, in terms of the high-quality providers,” Bahrke said.
Another Medicare ACO that assumed downside risk in its contract was the Rio Grande Valley Accountable Care Organization Health Providers, a group of independent providers. Rio Grande also succeeded, despite launching without a care coordination program, and in spite of working with multiple EMR systems across several independent medical groups.
Rio Grande's leadership chose to pursue the larger potential Medicare bonus after identifying operational changes that it believed could yield sufficient savings. Edwin Estevez, the ACO's administrator and chief operating officer during its first two years, likened the process to a patient considering diet and exercise changes to shed pounds. “I don't think there's any risk aversion in our group,” he said. “We went after it.”
Two other organizations, the Physicians of Cape Cod ACO and the Dean Clinic and St. Mary's Hospital ACO also entered into Medicare Shared Savings contracts with risk for both bonuses and losses. Both organizations ended the year with losses, CMS said. Neither responded to a request for comment.