Federal officials tout savings from Medicare accountable care program

The budget for Medicare rivals the Pentagon’s, and according to Congressional projections the program’s roughly $600 billion price tag could double within the next decade.

Now, four Kansas City-area physician groups and clinics are part of an effort to reduce the costs of the federal program that provides health care for the elderly and disabled, or nearly one in every five Americans.

The groups have formed three, federally recognized “accountable-care organizations,” or ACOs with the aim of trimming Medicare costs by closely coordinating the care they provide their patients.

Officials say they will focus on those who have expensive chronic ailments, such as diabetes or heart disease and they shouldn’t be hard to find given that more than two-thirds of Medicare beneficiaries suffer from more than one of these conditions.

Savings touted

The federal Centers for Medicare and Medicaid Services has approved approximately 360 ACOs, which are voluntary Medicare provider collaborations authorized and potentially rewarded by the federal government as part of the Affordable Care Act.

CMS officials today held a press conference announcing early success with the ACO program. “This is the largest and most ambitious test ever of a bundled payment model in Medicare or any other payer in the U.S.,” the officials said. Of the 114 ACOs that began operations in 2012, 54 had seen lower-than-expected costs. CMS said 29 of the ACOs will share $126 million in incentive payments as a result. CMS said there are now 5.3 million patients nationwide served by the ACOs and that the results have given them “great confidence that it is the right course.” They said the benefits were becoming apparent sooner than anticipated.

Two of the three in the Kansas City metro area are part of a new crop that came on line this month. The third is starting its second year.

Taken together, the three local ACOs include more than 150 doctors serving nearly 32,000 Medicare beneficiaries. Missouri and Kansas combined have about 1.4 million Medicare beneficiaries, according to the Kaiser Family Foundation.

The three Kansas City ACOs are:

• The Kansas City Metropolitan Physician Association, which includes Clay Platte Family Medicine Clinic in Kansas City, North.

• The Kansas Primary Care Alliance, which includes Jayhawk Primary Care, a subsidiary of the University of Kansas Hospital.

• And the Physician Collaborative of Kansas City, which includes Encompass Medical Group and Kansas City Internal Medicine.

The premise behind ACOs is that time spent controlling chronic conditions pays off in the long run by avoiding more expensive care, such as hospitalizations, when complications occur.

The ACOs get to keep half the savings they achieve for the Medicare program based on benchmarks set by CMS.

Getting ahead of the curve

Executives involved with the Kansas City ACOs said another key benefit is the experience the participating organizations will gain for the new health care payment models that are on the horizon.

Insurers, public and private, are moving from procedure-based reimbursements toward “bundled payments” that offer a set amount based upon a condition, which could be roughly compared to buying pizza by the slice versus paying a single price for the buffet.

As an example: Inpatient and outpatient facilities might share a lump sum for treating an elderly patient with a broken hip. Under the current system, the hospital would bill Medicare for the MRI and the primary care physician might bill separately for the lab work.

Many health policy experts contend that these formalized provider collaborations should produce better results for patients and save money and increasingly are viewed as the coming wave in medicine.

“If you sit here and watch it go by, you are going to be sitting here watching it go by,” said Encompass Chief Executive Dayna Hodgden. “You are going to be left, right?”

The Medicare ACOs’ shared-savings agreements go for three years. Federal officials will judge the organizations against nearly three-dozen performance measures, including proper monitoring of hemoglobin A1c levels among diabetics.

“We are just looking to strike the right balance between following evidence-based medicine and squeezing out any unnecessary expenses that are not relevant to a patients’ clinical status,” said Jill Watson, chief executive officer of the Kansas City Metropolitan Physician Association ACO.

It might take until the third quarter this year to see how KCMPA has done against its benchmarks, she said.

She said KCMPA would focus on getting patients in for wellness visits, ensuring successful hospital-to-home transitions, and reducing emergency room visits.

Not rocket science

Local ACO officials said doctors have long known that careful communication with patients and coordination with other caregivers is the best way to practice medicine. But the current fee-for-service model can discourages that because tasks like calling patients might not qualify as a billable expense.

The local executives said primary care practices also might lack the manpower to handle those tasks on top of the other day-to-day demands.

Carrie Jordan, chief operating officer for Jayhawk Primary Care, said some relatively new tools such as electronic medical records will make it easier to measure results.

“This hasn’t been rocket science. These aren’t new ideas,” she said. “As things become more automated and more reportable, it just brings the reality of the situation to the forefront.”