ACO model saves Medicare $384 million

May 5, 2015

An innovative payment model created as a pilot project by the Affordable Care Act generated more than $384 million in savings for Medicare in its first two years, according to an independent evaluation report conducted by the Department of Health and Human Services (HHS).

An innovative payment model created as a pilot project by the Affordable Care Act (ACA) generated more than $384 million in savings for Medicare in its first two years, according to an independent evaluation report conducted by the Department of Health and Human Services (HHS).

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The Independent Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) found that the Pioneer Accountable Care Organization (ACO) Model generated an average of approximately $300 per participating beneficiary per year – while continuing to deliver high-quality patient care. The Pioneer ACO Model is serving more than 600,000 Medicare beneficiaries.

In addition, the Independent Office of the Actuary certified that this patient care model is the first to meet the stringent criteria for expansion to a larger population of Medicare beneficiaries. “The Actuary’s certification that expansion of Pioneer ACOs would reduce net Medicare spending, coupled with Secretary Sylvia Mathews Burwell’s determination that expansion would maintain or improve patient care without limiting coverage or benefits, means that HHS will consider ways to scale the Pioneer ACO Model into other Medicare programs,” according to a statement from HHS.

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“The Affordable Care Act gave us powerful new tools to test better ways to improve patient care and keep communities healthier,” said HHS Secretary Sylvia M. Burwell. “The Pioneer ACO Model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large.”

The Pioneer ACO Model, one of the first payment models launched by CMS, gives experienced healthcare organizations accountability for quality and cost outcomes for their Medicare patients. Doctors and hospitals who form Pioneer ACOs can share in savings generated for Medicare if they work to coordinate patient care, keep patients healthy and meet certain quality performance standards, or they may be required to pay a share of any losses generated.

Compared to their counterparts in regular fee-for-service or Medicare Advantage plans, Medicare beneficiaries who are in Pioneer ACOs on average report more timely care and better communication with their providers, use inpatient hospital services less, have fewer tests and procedures and have more follow-up visits from their providers after hospital discharge.

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