The Accountable Care Organization (ACO) (created by Obamacare) is touted by the Administration and HHS as saving Medicare a good deal of money. Below it says $926 million in one year. Don’t believe it. The savings and their calculation are questionable.
The concept is simple; health care providers organize into a group providing coordinated care, avoid unnecessary care and hospitalization. Patients on the other hand may not be aware they are using a ACO and have no obligation to use ACO physicians.
The concept is similar to the HMO which for all the millions spent also failed to achieved the promised results.
Excerpts from Crain’s Detroit.com
Michigan’s 12 accountable care organizations fared better than national averages in saving Medicare money, generating profits of their own and improving quality, according to data for 2014 from the Centers for Medicare and Medicaid Services and interviews with ACO executives.
While only 32 percent, or 112, of the nation’s 353 ACOs saved enough money for Medicare to earn profits last year on the Obamacare program, half of the 12 ACOs based in Michigan made money, accounting for $42.6 million or 10 percent of the total $422 million kept for its owners.
Michigan’s 12 ACOs — including the Detroit Medical Center’s Michigan Pioneer ACO, the state’s only full-risk ACO — cared for about 266,000 Medicare beneficiaries.
Overall, Medicare ACOs saved Medicare nearly $926 million in 2014, a higher number than the previous two years of the three-year demonstration program, which has been renewed for another three years until 2018.
From late 2011 to 2014, Medicare contracted with 353 ACOs nationally with 7.5 million Medicare beneficiaries, or 15 percent of the total number of 50 million beneficiaries. There are 1.7 million Medicare beneficiaries in Michigan, the sixth-most of any state. Michigan’s 12 ACOs care for about 266,000 Medicare patients.
Still, Medicare savings accounted for only a 1 percent reduction based on the $600 billion spent on Medicare in 2014 for its 50 million beneficiaries. Some critics have used that small amount of savings to attack the program, which was authorized under the Affordable Care Act of 2010.
Now read this from Kaiser Health News 9-14-15
A high-profile Medicare experiment pushing doctors and hospitals to join together to operate more efficiently has yet to save the government money, with nearly half of the groups costing more than the government estimated their patients would normally cost, federal records show…
The Obama administration touts ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But so far the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.
Last year, Medicare paid $60 billion to 353 ACOs to take care of nearly 6 million Medicare beneficiaries. Some ACOs made significant strides in reducing use of hospitals and other costly resources. But patients at 45 percent of groups cost Medicare more than the government had projected based on their patients’ historic costs, records show. After paying bonuses to the strong performers, the ACO program resulted in a net loss of nearly $3 million to the Medicare trust fund, government records show.
“It’s turning out to be tougher to transform care and realign delivery than people had expected,” said Eric Cragun, an analyst with The Advisory Board Company, a consulting group based in Washington.
Medicare officials said most ACOs are still in their infancy, and that performances will improve with experience and ultimately save significant sums for Medicare while improving care for beneficiaries. “In the long run we’re shooting to achieve those goals,” Sean Cavanaugh, CMS’ deputy administrator, said in an interview.
Nonetheless, the results are short of what Medicare projected in 2011 as it launched the program. Those estimates anticipated the government would save between $10 million and $320 million during 2014.
Where do the numbers come from, how are they calculated? Who can you believe? Some stated savings conveniently ignore program expenses and thus state gross and not net savings.