Healthcare Technology Featured Article

September 12, 2012

Accountable Care Organizations Already Able to Reduce Healthcare Costs

Accountable care organizations (ACOs), a big part of the healthcare reform, are set up to rate physicians on how well their patients do, then pay them based on their patients’ outcomes, rather than just a lump sum, no matter how the patient fares.

The idea is to improve quality of care while reducing costs, with electronic health records leading the way so doctors can have access to information from others who have treated the patient, resulting in a much more detailed view, and presumably, better care. 

But a new estimate found that Medicare spending varied widely among 10 physician groups that tested the concept out before healthcare reform was finalized, according to And guess where the most notable reductions fell, low-income, medically complex seniors.  

Melanie Evans revealed in her story that Medicare spending, on average, for low-income seniors also covered by Medicaid, “decreased by $532 annually for elderly patients included in the five-year accountable care pilot, according to a report published in the Journal of the American Medical Association.” Those seniors with just single coverage – Medicare but not Medicaid – fared slightly better because Medicare spending on them declined by just $59 annually, on average, according to a team of researchers with the Dartmouth Institute for Health Policy and Clinical Practice.

But changes – and sadly, reductions in care – are becoming necessary in today’s healthcare world. “We can’t avoid defaulting on our national debt in the coming years without some significant reductions in the federal expenditures from Medicare and Medicaid,” said, John Kitzhaber, MD, an emergency physician. “To get ahead of that, we’re going to have to change our delivery model.”

Aaron E. Campbell reminded the public at that the Affordable Care Act “makes significant cuts to future Medicare spending. . .Changes in the fee-for-service reimbursement schedule add up to almost $200 billion.”But the cost reductions are not all bad, for patients. The study found that dual-eligible patients – those using both Medicare and Medicaid – who were enrolled in the accountable care experiment were less likely than other seniors to return to the hospital within 30 days of leaving, Evans reported.  Among the dual-eligible seniors, the savings were largely a result of reduced hospital stays, she noted. 

Evans quoted Carrie Colla, an assistant professor at the Dartmouth Institute and lead author of the study, as saying that the results “provide new information that shows vulnerable populations could benefit from efforts to overhaul healthcare incentives to promote quality and reduce costs.”

Edited by Brooke Neuman

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