ACOs produce little healthcare savings

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It's disappointing news for the architects and participants of accountable care, hoping that the alternative payment model would curb healthcare spending. A new Health Affairs study found that Medicare accountable care organizations (ACO) that improved diabetes outcomes by as much as 10 percent had little to no effect on cost savings, MedPage Today reported.

Medicare ACOs only showed limited savings under federal Shared Savings Program, in which ACOs must hit 2 percent in savings.

The Centers for Medicare & Medicaid Services anticipated that ACOs will receive an estimated median Shared Savings of $800 million for all participating organizations, at about an annual $2.5 million in Shared Savings payments per organization, according to the study. However, researchers found that the savings needed for that kind of dough would likely come from other quality improvement activities.

However, the results shouldn't be extrapolated to other conditions, David Eddy, founder and chief medical officer emeritus at the health-modeling company Archimedes, told MedPage Today. "Each condition has to be analyzed on its own."

In a separate study by the Agency for Healthcare Research and Quality (AHRQ), bundled payments did curb healthcare spending. The RAND research, which looked at single institutional providers, such as hospitals and skilled nursing facilities, concluded "there is weak but consistent evidence that bundled payment programs have been effective in cost containment without major effects on quality." The study found that moving from fee for service to a bundled payment model led to a 10 percent reduction in spending and utilization.

Nevertheless, researchers concluded that bundled payments could be a "promising strategy" for curbing healthcare costs.

For more information:
- check out the Health Affairs study abstract
- read the MedPage Today article
- here's the AHRQ report (.pdf)

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