Accountable Care Organizations Saves Medicare Money, New Study Says

Accountable care organizations (ACOs) are proving to be a great help for the healthcare system as they lowered costs of care for Medicare enrollees, a study in Massachusetts found.

An early cost-sharing program in Massachusetts designed to slash costs for private Blue Cross Blue Shield patients also lowered costs for Medicare patients who were seen by the same providers, according to a study published Tuesday in the Journal of the American Medical Association.

"This isn't rocket science. This is about getting to know your patients," said Don Franke of Alexian Brothers Health System, which has agreed to manage the care of 16,000 Medicare patients in its ACO. "It's about doing what you can do to keep them out of the hospital and avoid duplication of services."

ACOs are part of President Barack Obama's 2010 Affordable Care Act. The organizations are typically paid based on the quality rather than quantity of care they provide, and the hope is that they will coordinate services and prevent excess spending.

According to the study, the health care cost reductions came largely from outpatient care, with relative decreases in spending on office visits, minor procedures and imaging tests.

"Their results are, I would say, somewhat encouraging," Dr. Lawrence Casalino, head of outcomes and effectiveness research at Weill Cornell Medical College in New York, said.

"They didn't find huge savings."