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UPDATE 1-U.S. Medicare test program saved hundreds of million of dollars-study
May 4, 2015 / 4:00 PM / 2 years ago

UPDATE 1-U.S. Medicare test program saved hundreds of million of dollars-study

(Adds government official comments)

By Caroline Humer

NEW YORK, May 4 (Reuters) - A U.S. government test program with doctors and hospitals slowed healthcare spending in Medicare coverage for the elderly and disabled by hundreds of millions of dollars in 2012 and 2013 but savings were less in the second year, a study released Monday said.

The Journal of the American Medical Association study 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 healthcare savings back from the government.

The rate of savings was 4 percent in the first year, or a total of $212 million, and less than 1.5 percent, or $105 million in the second year. The savings are based on a comparison against spending on beneficiaries in the traditional Medicare fee-for-service program.

The program is part of the national healthcare reform law, or the Affordable Care Act, which aims to cut national healthcare spending through a variety of measures including more preventive health services and the extension of insurance to most people.

The program’s decline in savings between the first and second year could be due to the organizations grasping “the low-hanging fruit”, Dr. Lawrence Casalino of Weill Cornell Medical College said in a JAMA editorial that accompanied the study.

It suggests that either savings will always be smaller in subsequent years or that it will take time for the organizations to develop better processes that will lower costs in future years, Casalino wrote.

Some aspects of the Pioneer program are being incorporated into two new risk sharing care models that are being developed, Patrick Conway, acting principal deputy administrator at the Centers for Medicaid and Medicare Services, said during a press briefing.

Some current ACO organizations are expected to move into either the next Pioneer model or into the Medicare Shared Savings Program, he said. Of the 32 ACOs that began in the Pioneer program, 19 are still participating.

Conway said additional healthcare organizations have expressed interest in both the existing and new programs.

Reporting by Caroline Humer; Editing by Chizu Nomiyama, Grant McCool

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