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Study: Medicare Test Program Slows Health Care Spending

Hospitals, doctors spurred to improve quality of care for fee-for-service beneficiaries

A test program with hospitals and doctors reduced health care spending in Medicare coverage for the elderly and disabled by hundreds of millions of dollars in 2012 and 2013, but the savings were less in the second year, according to a Reuters report.

The study, published May 4 in the Journal of the American Medical Association, looked at beneficiaries in 32 Pioneer Accountable Care Organizations (ACOs), in which hospitals and doctors follow 33 quality and care standards for Medicare fee-for-service patients. In return, they can receive a portion of any health care savings back from the government.

The rates of savings were 4% in the first year ($212 million) and less than 1.5% ($105 million) in the second year. The savings were based on a comparison with spending on beneficiaries in the traditional Medicare fee-for-service program.

The Pioneer ACO model, part of the Patient Protection and Affordable Care Act, was designed to drive health care organizations to reduce expenditures while improving quality for fee-for-service (FFS) Medicare beneficiaries. The new study was conducted to determine whether FFS beneficiaries aligned with Pioneer ACOs had smaller increases in spending and utilization compared with other FFS beneficiaries while retaining similar levels of care satisfaction during the first 2 years of the Pioneer ACO Model.

The study found that the total spending for beneficiaries aligned with Pioneer ACOs in 2012 or 2013 increased from baseline to a lesser degree in relation to comparison populations. Differential changes in spending were approximately −$35.62 per beneficiary per month (PBPM) in 2012 and –$11.18 PBPM in 2013, which amounted to an aggregate of approximately −$280 million in 2012 and −$105 in 2013. Inpatient spending showed the largest differential change of any spending category (−$14.40 PBPM in 2012 and −$6.46 PBPM in 2013).

Changes in the use of physician services, emergency departments, and post-acute care followed a similar pattern.

ACO-aligned beneficiaries reported higher mean scores compared with other Medicare beneficiaries for timely care (77.2 vs. 71.2, respectively) and clinician communication (91.9 vs. 88.3).

According to an accompanying editorial by Dr. Lawrence Casalino of Weill Cornell Medical College, the test program’s decline in savings between the first and second year suggests either that savings will always be smaller in subsequent years or that it will take time for health care organizations to develop better processes that will lower costs in future years.

Sources: Reuters; May 4, 2015; and JAMA; May 4, 2015.

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