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Henry Chung, medical director of the Montefiore Accountable Care Organization, explains the CMO model to colleagues. / Mattthew Septimus, Montefiore Medical Center

WASHINGTON - The section of the Affordable Care Act aimed at changing the treatment of Medicare beneficiaries saved the program more than $380 million in its first year of operation, a top Medicare official said Thursday.

Accountable Care Organizations were created as part of the 2010 health care law and started in a series of pilot programs around the country. Instead of paying health care providers for each service they perform, ACOs focus on keeping patients out of the hospital.

The organizations are reporting even lower costs than Medicare as a whole, which has had record low spending increases in recent years, said Jonathan Blum, the principal deputy administrator for the Center for Medicare Services. "We are even more pleased that the quality scores are improving."

ACOs also use data to reduce treatment errors, coordinate care to ensure that patients don't have duplicate tests or bad drug interactions and work with community organizations to make sure patients have proper housing or food. The goal is to have a team approach to the care of each patient, which will help reduce costs.

To make sure hospitals, physicians' groups, long-term-care facilities and home health care organizations don't save money by pinching on care, the government uses quality measures to make sure patients both have good outcomes and report high satisfaction levels.

If organizations meet certain benchmarks, Blum said, "they earn money."

The first wave of ACOs, which have been active the longest, saved $147 million, Blum said. Of 23 of those ACOs, nine had "significantly lower" spending growth compared to Medicare organizations that use the traditional fee-for-service payment system.

"On 15 out of 15 quality measures, they did better than national benchmarks, as well as on four out of four patient satisfaction benchmarks," said Patrick Conway, the chief medical officer for Medicare.

About half of the Medicare Accountable Care Organization Initiatives, or 54 out of 114, had lower expenditures than they projected in their first year of operation, for a savings of $128 million.

Not all of the organizations saved money, Blum and Conway said. They emphasized that the organizations had just started and that ACOs are a "long-term" measure to achieve savings in Medicare.

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"This is a significant transformation," Blum said.

Follow @KellySKennedy on Twitter.



Copyright 2014 USATODAY.com

Read the original story: New care organizations save $380 million in first year

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