ACO Success Stories

By Christine Kern, contributing writer

Successful healthcare ACO

Despite mixed results, Medicare ACO program expanding, now over 350 organizations

When Heartland Regional Medical Center gambled and took the plunge in 2012, opting to join Medicare’s Shared Savings Program in its inaugural year, they had a great deal to lose. Yet in the first year of their ACO experiment, that risky bet paid off. The St. Joseph, MO, hospital owes Medicare nothing and instead will be awarded $2.9 million for its efforts.

As Health IT Outcomes reported in January, just over half of the 114 organizations that joined a Medicare accountable care effort in 2012 failed to reduce health spending below targets during their first 12 months trying to do so, newly released CMS data shows. Preliminary results highlight the uneven progress made to date by hospitals and doctors coordinating treatment and reducing unnecessary care to reduce healthcare costs.

Yet Heartland was not among those that failed.

One of only four out of 114 organizations that opted for the riskier of two payment options under Medicare’s broad test of accountable care, known as the Shared Savings Program, Heartland Regional was determined to be successful. Failure to curb medical expenses for Medicare patients under Heartland Regional’s care would put the hospital at risk for potentially significant financial penalties, and the hospital would be required to pay Medicare for a share of costs that exceeded set targets.

But with a willingness to risk losses, Heartland Regional also stood to earn bigger rewards. The remaining 110 organizations agreed to smaller bonuses with no risk for loss.

The initial results showed a much less enthusiastic return on investment. Modern Healthcare reports the inconsistent preliminary results are similar to the mixed performances in Medicare’s smaller test of accountable care. The CMS Innovation Center’s Pioneer ACO model, also launched in 2012, saw nine of 32 organizations exit the program after its first year. Nine of the remaining 23 organizations saved money, according to an independent audit.

Heartland Regional’s first annual bonus will total roughly $2,861,000, according to early results, which amounts to 60 percent of what the hospital’s quality and cost-control strategies saved Medicare.

However, as noted above, that success was not universal. Overall, three out of four organizations failed to earn Medicare bonuses in the first year of their programs. Twenty-nine organizations, including Heartland Regional, will share $128 million in bonus awards.

Rio Grande Valley Accountable Care Organization Health Providers, a group of independent providers, also opted for the higher-risk ACO option. Rio Grande was another success story, despite launching without a care coordination program, and despite the challenge of integrating multiple EMR systems across several independent medical groups.

Two other organizations, the Physicians of Cape Cod ACO and the Dean Clinic and St. Mary’s Hospital ACO also entered into Medicare Shared Savings contracts with risk for both bonuses and losses. Both organizations ended the year with losses, CMS said.

Despite limited and mixed results, the Medicare program continues to grow and now includes more than 350 organizations. The Shared Savings Program is one of several Affordable Care Act provisions that experiment with new ways to pay doctors and hospitals and is intended to promote efficiency and quality. In late March, the CMS announced deadlines for medical groups and hospitals to enter the next round of ACO contracts, which will begin in January 2015.