Accountable Care Organizations Report Lower Costs- Health Minute for September 16th, 2013
Accountable Care Organizations, ACOs, are at the center of the new Affordable Care Act. This healthcare business model bases insurance payments to healthcare providers on the quality of care they deliver, not the traditional fees-for-service. Skeptics have questioned the projected savings, but now, there are hard numbers to prove that ACO’s can deliver lower costs and increased profits. The CareFirst BlueCross BlueShield program that covers one million members in Maryland, northern Virginia, and Washington, D.C. is reporting cost savings of $98 million for its Patient-Centered Medical Home initiative last year. That’s from reduced hospital admissions, less use of emergency rooms, and lower spending on drugs. Under CareFirst, physicians who reduce costs are rewarded with higher payments, as much as 29 percent higher. The insurer offers the incentive pay because improving primary care, which accounts for only six percent of overall medical spending, reduces far pricier hospitalizations and specialist visits. CareFirst's savings compare to those reported by 10 physician groups across the United States that treated Medicare patients under an ACO model. Annual savings averaged $114 per patient, reaching $532 for patients eligible for both Medicare and Medicaid. Major insurers including UnitedHealth Group, WellPoint, Aetna, Humana, and Cigna are also contracting with doctors to operate under an ACO model. The business case for the Affordable Care Act is adding up. I’m John Howell for 3BL Media.
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