The health law encourages the creation of collaborative models called “accountable care organizations” (ACOs). ACOs are arrangements between doctors, nurses, hospitals, social workers, and other provider networks that aim to reduce wasteful Medicare spending by improving seniors’ and disabled Americans’ health, and reducing their need to make repeat trips to the hospital. Obamacare offers both a carrot and a stick to incentivize this model: if an ACO successfully provides coordinated patient care while keeping its Medicare spending below a year-to-year target, it gets to keep most of the difference as a bonus payment — but if it doesn’t, it has to absorb its losses.
Bloomberg describes what that sort of coordinated system looks like for sick seniors. Gerald Medlin, a 69-year-old Medicare beneficiary who is participating in the South Carolina-based Coastal Carolina Health Care’s accountable care program, suffers from dementia, respiratory illness, and kidney failure, and his only living family lives across the country in California.
Normally, that would be a recipe for expensive repeat trips to the emergency room, since Medlin has no caretaker and could end up forgetting to take his medication, consequently exacerbating his illnesses. But since he is participating in South Carolina’s accountable care program, Medlin has a caretaker whose sole job is to oversee his care and keep his daughter in the loop.
Many hospitals are already reaping the benefits of this type of care management. Of the 252 hospitals and physician groups that have signed up to become ACOs under Obamacare, big name groups such as Mount Sinai Hospital in New York and Hackensack University Medical Center in New Jersey have been closely tracking their accountable care program patients’ health, helping them comply with their treatment regimens — and seeing emergency room visits, repeat admissions, and Medicare billing plummet as a result. Hackensack saved $16 million on 11,000 Medicare patients last year alone.
Other ACOs have been mining through medical claims data to identify and direct expensive, high-risk patients to call nurses who manage their primary care, rather than a doctor’s office. Many doctors recommend emergency room visits that can prove wasteful, and aren’t always as knowledgeable about a patient’s health status as the nurses who work more intimately with them.
As many have predicted, these changes have already begun changing the contours of U.S. health spending. The federal government has yet to release its own assessment of ACOs’ success, but recent trends — and historical experience — suggests they are working exactly as intended.
Health care cost inflation has slowed to record lows; Medicare is the most stable it’s been in years; and hospital readmissions have fallen significantly for the first time in five years. While the Congressional Budget Office (CBO) couldn’t score the effects that ACOs will have on the federal budget (since they are new medical territory), it has found that similar coordinated care pilot models caused hospital admissions to decline by seven percent and Medicare beneficiaries’ costs to drop by six percent.
So far, ACOs only cover about 5 million Medicare beneficiaries. If the models continue enjoying these early successes, they might be an experiment that changes the entire American health care landscape and budget outlook.