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For many ACOs, patients cost Medicare more than projected

Kaiser Health News analysis finds ACO program resulted in a $3M net loss to Medicare trust fund

Patients at 45 percent of accountable care organizations (ACOs) in 2014 cost Medicare more than the federal government had projected based on historic costs, according to a Kaiser Health News analysis of government records.

The ACO program also resulted in a net loss of nearly $3 million to the Medicare trust fund last year, according to the article. This was after the program paid bonuses to the "strong performers."

Medicare ACOs generated $411 million in total savings in 2014, but few of the Pioneer and Medicare Shared Savings Program ACOs qualified for bonuses in the second year of the program, according to data released last month by the Centers for Medicare & Medicaid Services (CMS).

"It's turning out to be tougher to transform care and realign delivery than people had expected," Eric Cragun, an analyst with The Advisory Board Company, told KHN.

The Obama administration has set a target that by the end of 2018, half of Medicare spending currently based on volume will instead be linked to value. However, thus far, most doctors and hospitals in the ACO program are accepting the bonuses associated with the program and declining to accept the financial risk of any extra costs their patients incur, according to KHN.

Further complicating the picture for ACOs, several participants have exited the Pioneer program, including two at the end of August, citing financial difficulties. And Clif Gaus, chief executive officer of the National Association of ACOs, has said that 40 to 50 ACOs could leave the Medicare program this year unless the government takes steps to improve it, FierceHealthPayer has reported.

To learn more:
- read the Kaiser Health News article

Related Articles:
Medicare ACOs saved $411M in 2014, but few earned bonuses
Two more Pioneer ACOs may leave over financial woes
Feds speed plans for value-based payments
CMS announces 'Next Generation' accountable care organization model