While the nation waits to see how the Supreme Court will rule on the new health reform law, a key provision got off to a start Tuesday.
Federal officials announced the first 27 participants in 18 states in a new Medicare initiative aimed at fundamentally changing the way care is delivered and reimbursed for patients 65 and older. The Catholic Health system in Buffalo is among the 27 groups named.
The Affordable Care Act encourages groups of doctors, hospitals and other providers to form networks called accountable care organizations to coordinate care and measure performance for patients in the original Medicare program across multiple settings -- from the doctor's office and hospital to the home care agency and nursing home.
In an accountable care organization, doctors and hospitals take on joint responsibility for the health of their patients and receive financial incentives to save money and meet quality targets by avoiding unnecessary tests and procedures, tracking patients as they navigate through the network, and doing a better job of providing preventive care.
They can share in the financial gains. They also can take on financial risks if they don't meet the benchmarks. That's different from the current fee-for-service payment system that critics say is fragmented and beset by avoidable hospitalizations and duplicative tests.
"For the first time, groups like ours will be able to treat fee-for-service Medicare patients with a business model that rewards efficiency and quality," said Dennis R. Horrigan, chief executive officer of Catholic Medical Partners, the group that represents the 900 physicians affiliated with Catholic Health.
The health reform law included provisions to encourage new models of care that improve quality and control costs.
The 27 entities in the so-called "Shared Savings Program ACOs" will provide care to about 375,000 Medicare beneficiaries, according to the Centers for Medicare & Medicaid Services. The announcement follows the start earlier this year of another strategy known as Pioneer Model ACOs with 38 health care groups that already had experience coordinating patient care.
Medicare is the federal health insurance program for 49 million elderly and disabled Americans.
The initial role of accountable care organizations is expected to be modest. Federal officials estimate that between 50 and 270 ACOs will form in the next three years to care for about two million Medicare beneficiaries, and that the networks could save Medicare up to $940 million in the first four years. The thinking goes that, if the concept works, ACOs will expand.
To put the projected savings in context, spending on Medicare is projected to increase from $555 billion in 2011 to $903 billion in 2020, according to the Congressional Budget Office.
The Centers for Medicare & Medicaid Services said more than 1.1 million Medicare beneficiaries are now in an accountable care organization, and the agency is reviewing more than 150 applications from groups seeking to enter the program in July.
The federal government plans to track ACO performance on 33 quality measures relating to care coordination and patient safety, use of appropriate preventive health services, improved care for at-risk populations, and the patient experience of care.
"Accountable care organizations will improve coordination and communication among physicians and other providers which will help improve care and lower costs for Medicare beneficiaries," Marilyn B. Tavenner, acting administrator of the Centers for Medicare & Medicaid Services, said in a statement.
Catholic Health officials touted their selection, saying the program is a natural extension of the hospital system's progress in integrating care across its many sites.
"Regardless of what the Supreme Court does, and I hope it rules in favor of health reform, health care is moving away from fee-for-service care. We have to look at patients' whole health status and not provide services episodically," said Joseph McDonald, president and chief executive officer.
Catholic Health anticipates the program will begin June 1 and eventually care for about 25,000 patients.
The patients may not notice a big difference, except their physicians will use a team-based approach, including dietitians, nutritionists, pharmacists and office-based nurses, said Dr. Michael Edbauer, chief medical officer of the physicians' network.
Accountable care organizations are only open to patients in original Medicare and not Medicare Advantage, which is operated through private plans. Eligible patients will be enrolled automatically but will have the ability to opt out.
ACOs have been greeted with enthusiasm by some and skepticism by others.
For instance, last summer, the Centers for Medicare & Medicaid Services announced the results of a demonstration project that started in 2005 to test ways to reward physicians who provided care of higher quality at lower cost to Medicare patients. The 10 large medical groups in the Physician Group Practice demonstration project improved their performance on quality measures after five years, but the cost savings were modest.
"These results should dampen unreasonable expectations, particularly in terms of potential savings, for accountable care organizations, which were modeled after the PGP demo," Gail Wilensky wrote in November in the New England Journal of Medicine. She directed Medicare and Medicaid during the first Bush administration.
But advocates say ACOs remain a work in progress. They note that the physician groups in the demonstration project have extended the initiative and point to examples of such collaborations working, such as a recent report from the Institute of Medicine on a project in California.
"If the Supreme Court rules against the health reform law, then what?" McDonald asked. "We still need to do this. It's consistent with our values."