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New health care model aims to cut costs, improve care

May 21 2014

Are doctors, hospitals and insurance companies able to work together to improve health and lower health care costs? That is the fundamental question accountable care organizations (ACOs) are trying to answer.

In 2010, the Centers for Medicare and Medicaid Services (CMS) launched several ACO pilot programs as part of the Affordable Care Act. An ACO is an alliance of doctors, hospitals and other providers that share data and work together to try to improve care and reduce hospitalizations and medication errors.

CMS released results from several ACO pilot programs, in January 2014, which collectively generated $380 million in savings. Health care networks that participated in one of the ACO pilot programs were called Pioneer ACOs. Nearly half of the $380 million of savings ($147 million) came from Pioneer ACOs that collaborated with private payers like Aetna.

Banner Health Network of Arizona is an example. Working with Aetna to improve care, control costs and share financial risk, Banner delivered more than $13 million in shared savings in the first year of operation. More importantly, Banner reduced hospital admissions and readmissions and cut down the average length of stay in a hospital through preventative care.

“These results show that Pioneer ACOs have been successful in reducing costs for Medicare, improving the quality of care for their patients, and that incentives to align payment with quality can work.” Chuck Lehn, CEO for Banner Health Network, said in a statement.

“In the first year in the Pioneer ACO program, Banner Health Network delivered more than $13 million in shared savings.”

According to Charles Kennedy, M.D., Aetna’s chief executive for Accountable Care Solutions, ACOs drive greater integration and personalization of the health care experience, and that will bring better quality care and lower costs.

“The success of ACOs hinges on having better access to comprehensive patient health information,” Kennedy said. “We also need the right incentives in place to support doctors and hospitals to move from a system that rewards them for volume to one based on value and quality of the care.”

While it is still early, the ACO results to date show promise. System wide change will not come immediately but a coordinated care approach points to a future where patients receive better care, doctors have the right incentives and the health care costs are reduced.