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Feds Cite Healthcare Savings From Models Widely Adopted in New Jersey

Summit-based ACO among those achieving savings in first year of program

Bundled Payments for Care Improvement Initiative
Forty New Jersey healthcare providers currently participate in the federal Bundled Payments for Care Improvement initiative.

Federally sponsored accountable care organizations (ACOs) have saved more than $380 million nationally in their first year -- a positive sign for the many New Jersey healthcare providers committed to the model.

The federal Centers for Medicare & Medicaid Services (CMS) announced yesterday that 29 of the 114 Medicare Shared Savings ACOs active in 2012 accounted for $128 million of the overall savings. While state-level statistics weren’t released, the number of such organizations in the state has risen from four in 2012 to 18 today.

The Medicare Shared Savings ACO program pays providers more if they keep costs down and they meet agreed-upon standards for quality care. ACOs often use nurse care-coordinators to ensure that patients with chronic conditions receive appropriate follow-up after they leave the hospital.

While CMS didn’t provide savings for each ACO, officials with the Summit-based ACO Optimus Healthcare Partners said they are among the organizations that are achieving savings.

“It speaks to the quality of our physician network, our hardworking ACO staff, the collaborative relationship with our clinical and capital partner Atlantic Health System, and the transformative work we have accomplished,” said Dr. Thomas Kloos, Optimus president, in a statement.

The other early Medicare Shared Savings ACOs in New Jersey were the Morristown-based Atlantic Health System ACO, Hackensack Alliance ACO, and Barnabas Health ACO-North. Hackensack Alliance officials also said yesterday they had achieved savings. Following these initial four New Jersey ACOs, 14 more have been approved by CMS.

While the 2010 Affordable Care Act primarily focused on expanding access to healthcare, it also launched programs that aim to reduce healthcare costs while improving quality, such as the Medicare Shared Savings ACO program. Federal officials were eager to highlight the early returns yesterday.

“These innovative programs are showing encouraging initial results, while providing valuable lessons as we strive to improve our nation’s healthcare delivery system,” said Kathleen Sebelius, secretary of the U.S. Department of Health and Human Services, in a statement.

In addition to detailing the savings, federal officials announced that 254 more hospitals, nursing homes, and other providers have joined the federal Bundled Payments for Care Improvement Initiative. There are now 40 New Jersey providers that are participating in this program, in which providers agree to receive a “bundled” payment for an episode of care, such as heart bypass surgery. This requires the hospital, doctors and all other providers involved in the care to work together to divide up the payment.

There are four different models that the federal government is using to make these bundled payments, including one based on a pilot program that was launched by the New Jersey Hospital Association with 12 New Jersey hospitals in 2009. It’s been expanded to 20 hospitals since then.

“We are still providing leadership, guidance and support, as well as data modeling,” to the hospitals, association spokeswoman Kerry McKean Kelly said.

CMS officials said that the bundled-payment program is the largest and most ambitious test ever of this approach. They are looking to determine whether the payments will lead to more coordinated care for beneficiaries and lower costs for Medicare.

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