Hackensack University Health Network ACO saved Medicare at least $10M

Accountable Care Organizations (ACOs) finally showing signs of savings

Medicare announced Thursday the first round of savings they've seen from “Accountable Care Organizations,” a new program created under the Affordable Care Act where doctors and hospitals endeavor to reduce waste in the Medicare system while also improving patient care.

New Jersey has about 18 Medicare ACOs, but most have not operated long enough to generate savings. One that has been successful is the Hackensack University Health Network ACO, which started in April 2012 and has saved Medicare at least $10 million through the end of 2013.

The government announced that nationwide about half, or 54 of the 114 Medicare ACOs launched in 2012, already have lower expenditures than projected. Of these, 29 generated "shared savings" totaling more than $126 million, meaning they generated enough savings to be eligible to share the money that Medicare is saving.

Dr. Morey Menacker, chief executive of the Hackensack Physician Hospital Alliance ACO, said he was surprised that in the first year of the program only 29 Medicare ACOs nationwide generated enough savings to be in line for a portion of the Medicare savings.

"I expected that there would be more programs that had shown savings, and more significant savings," Menacker said. Hackensack is in line to receive 50 percent of the Medicare savings it generated, or at least $5 million.

Hackensack was successful for several reasons: its ACO was created as a partnership between the doctors and hospitals to get buy-in from all sides. The ACO also invested in the staff to coordinate medical care and IT to do the required analysis. It all started with "a smaller group of physicians who were willing to make changes in practice patterns, recognizing that there is a long term benefit associated with it," he said.

Linda J. Schwimmer, vice president of New Jersey Health Care Quality Institute said "We believe that the principles behind the ACO make sense and will show results over time. Now we are seeing changes and savings in areas where financial incentives are in place such as reducing (hospital) readmissions and in-patient days. These results are being driven by simple interventions such as bedside medicine reconciliation and primary care providers seeing patients within 48 hours of discharge."

Schwimmer said Medicare and private payers "are using carrots and stick to drive these changes. Moving forward, even more dramatic change will occur. This is a journey not a race, but it is the right path to follow."

Menacker said he believes his ACO has saved Medicare more than $10 million, and perhaps as much as $15 million. He expects to receive a shared saving payment from Medicare this summer, and the money will provide "bonuses to the physicians who have been working hard at this program." It will also provide funding to expand the ACO in coming years.

The ACO began with 12,000 Medicare patients and is now expanded to 20,000 patients. ACO was able to reduce hospital readmissions for the patients in the program by about half of what they would otherwise have been without the ACO, he said.

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