Last month CMS announced the results of the efforts of the Pioneer and MSSP (Medicare Shared Savings Program) ACOs for 2014. The headline made for compelling reading: Medicare ACOs Provide Improved Care While Slowing Cost Growth in 2014. This suggests that sustainable universal coverage is within our reach. Just in case you do not have the time to follow the link for yourself, let me help you appreciate the gist of the report.
In 2014 there were 20 Pioneer ACOs that were still in the program from the original 32 who had bravely accepted the challenge three years earlier. The great growth in the ACO world has been within CMS’s MSSP program. In 2014 there were 333 MSSP ACOs. There are many more in 2015. The 333 ACOs generated more than 400 million dollars in savings. That is fabulous, but people have a hard time evaluating what big numbers mean. Let’s think about it with some data from:
http://kff.org/medicare/fact-sheet/medicare-spending-and-financing-fact-sheet/
The net federal outlay for Medicare was $505 billion, 14% of the federal budget. That means that even more was actually spent on the care of the elderly because Medicare premiums, copays and other expenses borne by consumers are not included.
How many patients were covered by that $505 billion? The best numbers that I found are based on projections from 2012. There were just about 50 million beneficiaries in 2012 and that was up about 3.5 million over the previous 2 years. My guess is that, given the rapid increase of baby boomer recipients, there were probably at least 54 million in 2014. That means we spent a little under $10,000 a year for the average patient. There are a thousand millions in a billion, so the 400 million savings represented 0.4 billion, about $7.00 a patient if my math is correct. If the IHI has been right and at least 30% of healthcare expense is waste, then our potential savings is more like $3000 per patient, which would mean that a maximum yield might be as much as 150 billion dollars.
Such a gain is theoretically possible since the best Pioneers, like the Bellin-ThedaCare collaboration in the Pioneer program, had costs that were about a third lower than the average, and have consistently been at the top in quality! They obviously know how to use Lean.
There is another way to look at the results that gives us hope. Of the 54 million Medicare beneficiaries only a little over 5 million were in one of the 355 ACOs. That means that if the other ninety per cent had been covered we might have saved more than 5 billion or almost one per cent! There is plenty of opportunity ahead if we can engage the entire world of practice with efforts that match the best Pioneer and MSSP ACOs. Think about it.
What is more impressive to me than this year’s savings by the ACOs is that those savings occurred simultaneously with improvements in quality. Going back to what we believed in the nineteen eighties, we are doing what we once thought was impossible. That was the conclusion also of CMS.
As the number of Medicare beneficiaries served by ACOs continues to grow, these results suggest that ACOs are delivering higher quality care to more and more Medicare beneficiaries each year.
