Healthcare Finance News

September 17, 2012

Erin McCann, Contributing Editor

LEBANON, NH – New payment models used in accountable care organizations (ACOs) have shown considerable promise, yielding overall savings and reduced readmission rates, according to a recent study conducted by the Dartmouth Institute for Health Policy and Clinical Practice. 

The study, published in the Sept. 12 issue of The Journal of the American Medical Association, examined the cost savings associated with the Physician Group Practice Demonstration (PGPD), a Medicare program that ran from 2005 to 2010 and closely resembled current ACOs.

Study analysis pegged the overall annual savings from this value-based payment model at $114 per Medicare beneficiary, and the overall annual savings for dually eligible populations – that is, patients who qualify for both Medicare and Medicaid – at $532 per beneficiary. 

…Readmission rates were also affected in the demonstration, with 30-day medical readmission rates decreasing 0.67 percent overall for both populations, and 1.07 percent for dually eligible beneficiaries. Moreover, surgical readmissions for dually eligible populations decreased 2.21 percent overall. With 990,117 Medicare and/or Medicaid beneficiaries included in the experimental group, and 7,514,453 beneficiaries in the control group, report authors say these numbers are statistically significant.

…Physician groups participating in the demonstration could receive up to 80 percent of savings they generated. In the new ACO programs, savings are generally lower, between 50 to 70 percent…

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