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Medicare’s Coordinated Care Program Saves Big Bucks, Report Says

Researchers say it improves the quality of patient care while cutting costs


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9.7 million patients participated in the shared-savings program in the three years studied.
Phil Leo/Michael Denora/Getty Images

Most participants in Medicare’s shared-savings program for accountable care organizations (ACOs) have saved money in the first three years of the program, resulting in nearly $1 billion in cost reductions, according to a study by the inspector general of the Department of Health and Human Services.

ACOs, an outgrowth of the Affordable Care Act, are groups of doctors, hospitals and other providers who coordinate services to maximize quality care without duplication and to minimize medical errors.

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A total of 428 ACOs serving 9.7 million patients participated in the shared-savings program in the three years studied. About two-thirds of all ACOs showed at least one year of cost savings.

Besides the savings, the high-performing ACOs also improved performance on 82 percent of individual quality measures outlined in ACO guidelines. They also outperformed traditional fee-for-service providers on 81 percent of those measures.

A few high-performing ACOs produced "substantial" savings, the report found, reducing spending by $673 per beneficiary for key Medicare services. As an incentive for reducing costs, ACOs share in Medicare’s overall savings.

The report bolsters evidence that although ACOs do not uniformly perform well, in general they are improving care, David Muehlstein, chief research officer at Leavitt Partners, told the journal Modern Healthcare.

"It's not just about getting paid differently," he told the journal. "It's about providing care differently, and it takes time."

Of the 428 ACOs studied, 36 dropped out, but the overall number of ACOs grew substantially from 220 in 2013 to 392 in 2015.

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