Medicare spent nearly $586 billion in 2013, representing a fifth of all U.S. health care spending. The taxpayers who fund the public health insurance program for the nation’s seniors should know they’re getting their money’s worth.
That’s where organizations such as Beacon Health come in.
The consortium of hospitals and primary care practices covering much of central, eastern and northern Maine is one of 18 in the nation that have taken the deepest dive yet into the health care model known as accountable care. Beacon includes Eastern Maine Healthcare Systems’ hospitals and affiliated primary care practices in addition to a handful of practices and hospitals outside of EMHS.
The 18 health care organizations are participating in a federal government-sponsored, six-year pilot project that gives them a financial stake in keeping their Medicare patients healthy and reducing their health care spending. For so long in medicine, the financial incentives have rewarded the opposite — more health care at a higher cost, but not necessarily better health. Changing that reality across health care is an important part of reining in health care spending growth, which has generally outstripped the pace of inflation and economic growth in recent decades.
The results from the first two years of the accountable care pilot project, called the Pioneer ACO Model, are promising. The initiative has produced savings for Medicare and led the participating health care organizations to improve their quality of care.
In 2012 and 2013, the Pioneer ACOs saved Medicare $384 million total, according to a recently released evaluation of the program. That worked out to $35.62 in savings each month for each participating Medicare beneficiary in 2012 and $11.18 in 2013.
The reason? A focus on coordinating all of a patient’s care regardless of the setting with an eye toward preventing unnecessary hospitalizations. That often involves helping patients through day-to-day management of chronic diseases or addressing the root cause of frequent hospital visits. The coordination might involve regular check-ins by phone or home visits by care coordinators. The coordinators might encourage patients to call them when they’re not feeling well rather than wait for the next appointment or call 911 — whatever it takes to reduce trips to the emergency room, costly and lengthy hospital stays, and readmissions after discharge.
In Maine, Beacon Health tasked a number of staff members with those care coordination responsibilities for the 28,000 Medicare patients assigned to the organization. Beacon also set up an arrangement that allows primary care practices and hospitals to refer Medicare patients directly to skilled nursing facilities (where they’re often sent for rehab after hospital stays) rather than follow a rule requiring three expensive days in the hospital before the transfer can happen.
“It’s really tied to the total cost of care,” said Michael Donahue, Beacon Health’s executive director. “When you approach care management with that perspective, it’s totally different than if you have a care manager focused [only] on what’s going on within the walls of hospitals.”
Beacon Health produced $4.05 million in savings for Medicare in 2012; since it met quality requirements, it got to keep $2.03 million. The stakes were raised in the second year, when Pioneer ACOs could both share in the savings but also return money to Medicare if their spending rose beyond the targets. In 2013, Beacon Health’s spending went $6.26 million beyond the target, and it had to return $2.89 million to Medicare.
Beacon Health was one of six ACOs to return money to Medicare in the second year. But even though it didn’t meet the savings target, a Government Accountability Office review found the participating ACOs all saw their quality ratings rise on a number of key measures, from patient satisfaction to the portion of patients receiving flu shots. Plus, an outside evaluation of the Pioneer project calculated savings in a different way than Medicare and found Beacon might, after all, have saved Medicare money in the second year when compared with nearby Medicare patients not affiliated with Beacon.
The Beacon Health providers haven’t yet seen a fundamental transformation in the way Medicare pays them; they still collect fees for each procedure rather than a constant, per-patient amount. But that change could happen in the future, Donahue said.
“All of these things are evolving,” he said. “The consistent, 8-10 percent increases in premiums, that’s not going to continue. These kinds of models allow the transformational work to occur on a more gradual basis rather than an abrupt change.”