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Affordable Care Act Experiment Fails to Cut Unnecessary Hospital Admissions

Expenses rise at federally funded ‘medical homes’

A $57 million experiment to deliver better, more-efficient care at federally funded health centers struggled to meet its goals and is unlikely to save money, says a new government report.

The test to coordinate treatment for high-risk Medicare patients in hundreds of communities was one of many demonstrations run by the Department of Health and Human Services’ (HHS) innovation center. The Patient Protection and Affordable Care Act (PPACA) created the lab and gave it $10 billion over a decade to test new ways to improve care and save money.

As the trial wound down last fall, 69% of the clinics that hadn’t dropped out had obtained full accreditation as “medical homes” — primary care practices that coordinate care across specialists, hospitals, and emergency rooms. The Department of Health and Human Services had hoped for 90%.

Another goal was to cut unnecessary hospital visits. But admissions and emergency-room care rose in centers that were part of the experiment compared with results in those that weren’t. So did expenses.

“It appears that the demonstration will not achieve cost savings,” concluded the RAND Corporation, an independent research group, in a study commissioned by the HHS’ Centers for Medicare & Medicaid Services. The HHS recently posted the report on its website.

There had been talk of extending the 3-year demonstration, but the PPACA requires the HHS to stop experiments that don’t show signs of saving money or improving care. The program ended in October 2014.

“They’re saying that they actually saw potential increases in utilization and costs, which is not what CMS was hoping to see,” said Dr. Eric Schneider, senior vice president for policy at the Commonwealth Fund. “But it’s not necessarily surprising.”

Medical homes have been widely promoted as one solution to America’s disconnected health system, which  by some estimates wastes 30% of its spending on unnecessary treatment, fraud, and bloated administrative costs.

Health-reform specialists cautioned against counting the RAND report as a strike against medical homes.

“It would be a mistake to say we can conclude that the medical home model does not work,” said Dr. Marshall Chin, a professor at the University of Chicago Medical School who reviewed drafts of the RAND study.

Indeed, the model was barely tested. Even among clinics that did qualify as medical homes, most weren’t certified until late in the program. Becoming a medical home, which requires patient-tracking software, referral protocols, and lots of training, was more difficult and took longer than many expected.

The HHS did not respond to requests for an interview from Kaiser Health News. The agency has compared the innovation lab to a venture capital fund, in which some investments are expected to fail as the cost of finding high-payoff winners. Republicans have criticized it as a waste.

Sources: Kaiser Health News; July 27, 2015; and CMS; July 2015.


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