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Closely Watched Accountable-Care Program Saved $385 Million, Study Says

By Kerry Young, CQ Roll Call

May 4, 2015 -- An analysis by Medicare officials pegged the savings from an early approach to better coordinating treatment of patients at roughly $385 million over two years. The study may provide a boost to the accountable care organization model, which experienced a significant dropout rate in one of its major tests.

The Journal of the American Medical Association (JAMA) recently published research from the Centers for Medicare and Medicaid Services (CMS), which is using the Pioneer Accountable Care Organizations (ACO) to test a popular premise in health care policy that more coordinated care can generate savings without compromising quality. The analysis comes as CMS is preparing to advance the concept with its Next Generation ACO, a model meant to offer both more financial risk and reward to participating institutions. The agency also is looking to more widely apply lessons about coordinating care gained from the Pioneer model.

"This gives CMS greater confidence in scaling elements of the model to benefit people across the nation, and we are working to determine the best strategies for embedding the lessons we have already learned from the Pioneer Model into permanent Medicare programs and our nation's health system," said Patrick Conway, the acting principal deputy administrator of CMS, in a recent statement.

The Pioneer program is one of the broad initiatives meant to overhaul the delivery of medical care that were created through the 2010 health law. Kicked off in 2012, the Pioneer ACOs program started with 32 medical systems already considered leaders in the field of coordinating care as participants. Only 19 organizations remain in the Pioneer ACO program now, with some having switched to the Medicare Shared Savings Program, another model meant to encourage more coordination of health services.

"It's a signal that those organizations decided that the Pioneer ACOs may not have been the best thing for them to do right now," said Stuart Guterman, a former CMS official who now studies Medicare at The Commonwealth Fund, in an interview. "They may have thought that they could do better in another arrangement."

The findings of the JAMA paper are positive, according to Guterman, who was not an author of the paper. He's among the policy experts seeking to move Medicare away from a fragmented approach to health care delivery, which can result in duplication of services and missed opportunities to head off complications of disease.

To test whether this approach truly generated savings, CMS researchers compared the experiences of people aligned with Pioneer ACOs with those of a similar group of people also enrolled in traditional Medicare.  They concluded that total spending rose less for the 1.48 million people aligned with the hospitals and medical groups in the Pioneer ACO program than for the other group, with the bulk of the claimed savings—$280 million—happening in the first year.

"This amount may seem small but if this rate of savings could be sustained, and achieved throughout a large part of the U.S. healthcare system, it would be more than enough to 'bend the curve' so that health care expenditures do not continue to increase as a percentage of the gross domestic product and the federal budget," said Lawrence Casalino of Weill Cornell Medical College in an accompanying editorial in JAMA.

In the study, the spending difference in the first year was largely due to fewer physician encounters and hospital admissions, while in the second year, reductions in preventable hospitalizations played a role.

The savings cited by CMS topped another estimate published last month in the New England Journal of Medicine. That paper pegged the first-year savings at $118 million, an amount that the authors described as exceeding the $76 million in bonuses paid by CMS to the Pioneer ACOs by $42 million.

The lead author of the New England Journal of Medicine paper said it would take some time to fully analyze the methods used for the paper in JAMA.

J. Michael McWilliams, an associate professor for health care policy at Harvard Medical School, said the comparison groups in his study were more similar in baseline spending and spending growth to the control group than in the other study. 

The New England Journal of Medicine analysis "produced results suggesting more modest savings in the first year—savings we think are more plausible," McWilliams told CQ HealthBeat in an email. "But again, the overall conclusions are more similar than different. The two studies generally tell the same story."

The savings estimated from the Pioneer ACOs program appeared to have happened without harming patients, and in fact, the approach used may offer them benefits, wrote former CMS administrator Mark McClellan in a second editorial published by JAMA on the CMS paper.

"These changes occurred without apparent adverse consequences for patient experience with care; indeed, Pioneer beneficiaries reported somewhat more favorable experiences in terms of timely access to care and clinician communication," wrote McClellan, who now is director of the Health Care Innovation and Value Initiative at the Brookings Institution.

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