How Medicare Can Achieve Saving through ACA/ACO

How Medicare Can Achieve Saving through ACA/ACO

It is extrapolated that the enrollment of Medicare Patients into a particular ACO such as the ACO associated with Gotham will result in cost savings by Medicare. This savings will be achieved through improved services that will lead to efficient care. Some of the strategies that will lead to cost savings through the ACO include:

• Coordination of care: as highlighted earlier, it is anticipated that co-ordination of care amongst the various members of the ACO structure will lead to integrated care that will eliminate redundancies. Some of these redundancies manifest themselves as repetition of investigations already performed by a particular provider and lack of proper communication between providers in managing a particular patient. One of the ways various providers in a particular ACO unit will have access to patients’ information is the use of HIPPA-compliant HIT structure in which every patient has a particular Identifier Code that each members of the ACO could use to access the patients’ information. In the case of Gotham ACO unit, all members of the structure can remotely access patient’s data through the Bronx RHIO [define and discuss] which provides a centralized EMR digital access to all associated ACO’s. This provides savings to Medicare through both reduced administrative cost and reduced cost of redundant investigations.[this is the main point about ACOs. Discuss this more with supporting documentation]

• Bundled Payment: again, as earlier highlighted, under the ACA/ACO, CMS has a contractual agreement for bundled pay per episode of care. Due to this mode of payment, the ACO will have to co-ordinate care across multiple spectrums of care settings from inpatient Physician services, hospital and clinics to post-acute and post admission care for insured patients. This will also involve preadmission preventive services that will discourage avoidable admissions. All members of the ACO unit have a common interest in ensuring that enrolled members do not develop any form of preventable disease. Thus, this method of payment introduces accountability across various spectrums of providers with common interest in saving cost since they all receive payment per episode of care rendered. This elimination of fragmented care as highlighted can potentially save money for Medicare by having a healthier population of enrolled patients. (NCSL, 2013)

• Better reimbursement coordination: The ACO provides an overarching legal structure for CMS and other third- party insurers to co-ordinate reimbursement of providers. The ACO provides direct contraction by payers with providers without reliance on healthplan intermediaries such as Managed Care Plan. In this capacity, The ACO provides Medicare and Private Insurance companies with a vehicle for implementing comprehensive payment reform that can potentially save administrative cost through efficiency.[is this true?]

All these factors put together can potentially control the cost of healthcare while also getting a better value for every dollar spent on healthcare (NCSL, 2013).

How can ACOs reduce costs for Medicare and possibly the Private Insurers?

As at the time of this writing, there are 106 new ACO in contractual agreement with Medicare, ensuring that as many as 4 million Medicare beneficiaries now have access to high quality, coordinated care across the United States (Kronick and Po, 2013). It is estimated that at least a 3-year period is needed before the full impact of the ACO in saving cost can be adequately evaluated. While it is still yet too early to effectively gauge the effect of ACO in containing cost, report released by HHS Secretary, Kathleen Sebelius indicated that “expenditure per Medicare beneficiary increased by only 0.4% in Fiscal year 2012”. This was substantially below the 3.4% increase in per Capita GDP. This pattern of low Medicare expenditure per Capita has continued since 2010 which roughly coincided with the enactment of the ACA (Kronick and Po, 2013). While this is an interesting and admirable development, the group is of the opinion that more time is needed to effectively gauge the effect of the ACA/ACO reform in reducing cost as this reduction in expenditure can be attributable to other factors such as the recession in the economy in this time period that resulted in general cut in expenditure in the healthcare.

Looking at the Gotham hospital in particular, judging by its performance since its inception, the success of the model cannot be overstated. In a recent report from the Agency for Healthcare Research and Quality (AHRQ), the agency praised Gotham ACO group of providers for its innovative achievement in containing cost and improving quality of care in spite of its capitated payment structure (Quellette, 2012). The report notes that Gotham ACO has lowered admission, readmission and medical expenses and put a strong emphasis on patients with chronic disease. This success is commendable considering the fact that Gotham has maintained capitation system reimbursement instead of the bundled payment that can potentially increase their revenue. [Is this true? Are they all capitated for Medicare?]It can be projected that even more improvement and success should be expected with the full implementation of the bundled payment in the nearest future in the Gotham ACO. Furthermore, in a white paper recently released by Modern Healthcare Insights (2012), the agency acknowledges the success of the Gotham ACO model in improving patient quality and reducing cost. However, efforts to obtain specific statistical data to enumerate the specific savings was not successful because at the time of writing this paper, the Gotham ACO was still in transition and the ACO members are still expanding. Just recently, The Empire Blue Cross and Blue Shield just entered into contractual ACO agreement with Gotham ACO which started January 1, 2013. This partnership is due to the success of the ACO model. The apparent success of the Gotham Model ACO could be due to the fact that most providers that are part of the Gotham ACO unit have had some form of partnership with Gotham hospital in one way or the other. It still remains to be seen how the ACO will evolve with the full implementation of the ACA. One important factor to note will be the implementation of the individual mandate clause of the ACA which will require mandatory purchase of Health Insurance coverage by all Americans in 2014. The group is of the opinion that the apparent holistic success of this model in curtailing cost will be measured about 2-3 years after complete implementation of the healthcare law, especially the individual mandate. Perhaps another capstone group can research to determine the specific cost savings down the line after the ACO has been in full operation and given more time for adequate assessment.

However, since Gotham has had a similar pattern of integrated care pre ACA, extrapolation can be made to the likely success based on its previous performance in terms of cost savings. The coordinated and integrated care amongst the group of ACO associated with Gotham has greatly improved patient quality care outcome that has resulted in cost reduction through coordinated care. Examples?

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