A Medicare pilot program started in 2005 chose 10 groups for an experiment in improving quality and controlling costs. This foreshadowed some of the cost-control rules in the Patient Protection and Affordable Care Act (ACA) , with groups given bonuses for meeting approximately 15 quality measures, and for spending at least two percent less than conventional Medicare.  This program is a forerunner to the Accountable Care Organization (ACO) model that is one of the prime means by which the ACA’s supporters expect it to control costs.  Now that the results are in, the quality issues were met, but the issue of cost proved to be far more difficult to achieve.

Writing in The Atlantic, Megan McArdle says that Donald Berwick, the head of the Centers for Medicare and Medicaid Services (CMS), says “he is optimistic about the potential of ACOs to lower costs by coordinating care, although he acknowledged that savings from the experiment ‘were unevenly distributed, and they were modest…if care is correctly coordinated, costs fall and quality rises.  To me, it’s a matter of how fast we will get there, not whether we will get there.’  He may be right; sometimes you just haven’t done a program correctly.  On the other hand, sometimes programs don’t work, were never going to work, and can’t be made to work.  Even in the latter case, you still hear the sort of thing that Berwick is saying from the proponents of said programs: we need more time, more money, more staff, more rules.  People have usually spent years, even decades, investing in their ideas; when contrary evidence comes in, their first instinct is rarely to say, ‘Well, that’s too bad–it sure seemed like it was going to work, but I guess it didn’t!’.  No, what they want to do is double down.”

Started in 2005 by the George W. Bush administration, the experiment offered “performance payments” to participants that met most of 32 measures of quality — half as many as in the proposed rule — and spent at least two percent less for Medicare patients.  Despite their spotty financial progress, all 10 medical groups in the experiment met the quality requirements.  Additionally the program promoted care innovations, according to administration officials, outside health policy experts and leaders of the groups.

The Obama administration recently announced new options for Medicare ACOs.  The new shared savings components complement the proposed rules that will be finalized this year, Dr. Berwick said.  This pioneering model has been in process for months and that the latest announcement was not in response to skepticism about the proposed rules.  “This is responsive to some of the concerns on how to get started faster,” Dr. Berwick said.  “That’s what we’re getting asked about a lot. The criticism is comment we’re welcoming.”

CMS’ announcement represents a step in the right direction, although additional changes to the shared savings program need to be included to assure physician involvement, said American Medical Association’s (AMA) Immediate Past President J. James Rohack, MD.  “The AMA is pleased that (the innovation center) is working to assist physicians at varying stages of readiness who want to participate in Medicare ACOs,” Dr. Rohack said.  “The benefits of this new care delivery model cannot be fully realized unless physicians in all practice sizes can be involved.”

The CEO of the Cleveland Clinic hates proposed federal rules for accountable care organizations, saying they create “significant barriers” and would discourage hospitals from adopting the new model of care.  Toby Cosgrove made the comments in an eight-page letter addressed to Donald Berwick, though Cosgrove stressed that the Clinic supports the concept of accountable care organizations (ACOs).

“Rather than providing a broad framework that focuses on results as the key criteria for success, the proposed rule is replete with (1) prescriptive requirements that have little to do with outcomes; and (2) many detailed governance and reporting requirements that create significant administrative burdens,” according to Cosgrove.

To be considered an ACO, organizations must agree to manage all of the health needs of a minimum of 5,000 Medicare beneficiaries for at least three years.  ACOs are appealing to hospitals because organizations that save Medicare money will be eligible to share in some of that savings themselves.  CMS is accepting public comments on its proposed ACO rules and will issue final rules later this year.  Like the Clinic, other leading hospitals have criticized the rules as being too burdensome and providing too little possibility of financial gain.