Medicare rules seek improved care, lower costs

By Donna Smith

WASHINGTON (Reuters) – Medicare regulators on Thursday launched a program for doctors to deliver more follow-up care to patients that they predict will save the government as much as $960 million over the next three years while providing better healthcare for the elderly.

The Centers for Medicare and Medicaid Services proposed rules under President Barack Obama’s healthcare overhaul setting out guidelines for doctors and hospitals who form so-called accountable care organizations to deliver Medicare services.

The idea, called coordinated care, is to give primary care physicians a financial incentive to follow up on patients who are sent to the hospital or prescribed a course of treatment.

The traditional pay for service structure provides no such incentives, which take the form of a share of any cost savings.

“We’ve known for a long time that too many Americans fail to get the best care when they walk into a hospital or a doctor’s office,” Health and Human Services Secretary Kathleen Sebelius said in a telephone press conference.

“One in every five Medicare beneficiaries who leaves the hospital is back within 30 days. In many cases it is because they failed to receive the correct follow up care,” she added.

Last year’s healthcare overhaul gave the agency that oversees Medicare the authority to try accountable care organizations.

Lawmakers saw the organizations as a way to improve care for the elderly while saving money for the government program that provides healthcare for the elderly.

Doctors would have to inform patients if they are part of an accountable care organization and patients do not have to enroll in a group. They would remain free to seek care from other providers on a fee for service basis, CMS administrator Donald Berwick said.

That’s the biggest difference between an accountable care organization and a traditional health maintenance organization or the Medicare Advantage program, which delivers Medicare benefits through private insurers like Humana Inc and Cigna.


The proposal comes as Republicans in Congress are calling for drastic federal budget cuts, with some of the most fiscally conservative lawmakers saying they want to overhaul Medicare.

Sebelius said the new program could save as much as $960 million over the next three years.

The aim was to shift Medicare away from paying for quantity of services to rewarding a better quality of service and healthier outcomes. To that end accountable care organizations would have to meet quality benchmarks set by Medicare.

Accountable care organizations would also have to share in any losses that exceed cost benchmarks.

But the proposed rules provide a way for new organizations to operate on a shared savings track for two years before taking on the risk of shared losses.

Organizations with more experience could sign up for a higher share of savings by taking on the loss risk in the first year of their contract with Medicare.

Paul Keckley, executive director of Deloitte Center for Health Solutions, said the two-stage approach will help smaller organizations with less experience to participate in the program that otherwise might be dominated by larger players.

Blair Childs, senior vice president of Premier health alliance of some 2,500 non-profit hospitals, said the accountable care organization structure “has a lot of potential.” He said about 30 organizations are already operating across the county.

(Reporting by Donna Smith; Editing vy Cynthia Osterman)

Medicare rules seek improved care, lower costs