Posted

John Commins, for HealthLeaders Media, July 10, 2012
 

Federal officials announced Monday that 89 Accountable Care Organizations opened on July 1 in 40 states and Washington, DC and will serve 1.2 million Medicare beneficiaries.

Jonathan Blum, principal deputy administrator and director of the Center for Medicare, said in a teleconference that another 400 provider groups have filed notice that they will apply to be in the next wave of shared savings ACOs that become operational on Jan. 1, 2013.

“That gives us even more confidence that this program will grow over time and more organizations will come in over time,” Blum told reporters at a midday teleconference.

The 89 new ACOs bring to 154 the total number of provider groups in the voluntary Medicare shared savings initiatives. That includes 32 ACOs in the Pioneer ACO Model named last December by the Center for Medicare and Medicaid Innovation, and six Physician Group Practice Transition Demonstration organizations that began in January 2011.

As of July 1, more than 2.4 million Medicare beneficiaries are receiving care from shared savings ACOs, and almost half of the ACOs are smaller physician-led organizations that serve fewer than 10,000 beneficiaries, Blum says.

“What is significant is the degree of provider physician interest,” Blum explains. “Contrary to some fears that were expressed last year, we have a very strong program that exceeds our goals for the first year. We have over 2.4 million beneficiaries being served by these ACOs and we really see this thing led by the physician community to improve patient care.”

Blum says the Medicare Shared Savings Program, part of the 2010 Affordable Care Act, by some projections could save the Medicare trust fund up to $940 million over four years. However, he believes it’s too early to tell if the ACOs are already on their way toward the stated goals of saving money and improving care quality.

“Obviously this is going to be a key factor that we track very carefully,” Blum says. “We have a very strong interest to ensure that beneficiaries get better services than they do today. We will make this data transparent to the public but it is too early to tell given that the program is still in its early stages.”

Only five of the 89 new ACOs chose the so-called two-sided risk model that has greater earning potential but also puts providers on the hook if savings metrics fall short. Blum says “by far” most organizations chose the safer one-sided risk model, which pays only on achieved savings. All ACOs in their second contract period will have to take two-sided risk.

The 89 new ACOs were selected from an applicant pool of more than 150 providers. Beginning this year, ACO applications will be accepted annually. The application period for the Medicare Shared Savings Program that begins in January 2013 runs from Aug. 1 through Sept. 6.

Simeon A. Schwartz, MD, president/CEO of White Plains, NY-based WESTMED Medical Group, says the shared-savings program had the financial incentives to compel his 200-physician primary care-focused multispecialty practice to become an ACO.

“We think the savings are largely going to come out of hospital utilization because we see already in our organization that there have been many opportunities to move care to the outpatient setting,” says Schwartz, who joined Blum on the midday teleconference.

“Because of the different price Medicare pays us versus the hospital for the identical service outpatient services in the physician setting is a big savings right there,” Schwartz says. “Then if you are able to provide urgent care services instead of ER services that is a big savings. Finally if you have sufficiently coordinated outpatient programs working with community providers such as nursing organizations and others you are able to further decrease hospital utilization. We are hoping to see savings of 5% or 10% over the course of the three years of the program.”

Schwartz says WESTMED has hired case managers to better analyze patient data, which will help the group  identify and coordinate care for high-risk patients and plug other care coverage gaps.

“We consider it a trifecta,” he says. “The government will do well, the patients will do well, and we will do well. And we hope it turns out to be successful.”   

 

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