According to recently released results, Medicare’s cooperative care program has failed to save American taxpayers money this year. The results, originally released in August, show that the program suffered a net loss of almost $3 million this year. Patients at 45 percent of co-ops cost Medicare more than government projections.
The program offers bonuses to hospitals who band together as accountable care organizations, or ACOs. The program aims to reward hospitals for keeping patients healthy rather than giving them a financial incentive to treat illnesses, as Medicare traditionally did. The ACO program allows organizations that create savings to keep part of the savings as a bonus, and encourages them to opt in for a higher-risk/higher-reward deal which sees them given larger bonuses if they meet cost targets but forced to pay the shortfall if they miss them. This high-risk deal was the cornerstone of the program and gives ACO’s a personal stake in keeping costs down, but uptake for this part of the program has been so poor that the government has been forced to extend the trial period. This year, just 7 percent opted in to the high-risk program.
The ACO initiative was launched in 2011 and hailed as as one of the most promising reforms in the 2010 federal health care law. Obama’s administration said that by 2018 it planned to base half of Medicare spending on quality and frugality. Projections back in 2011 were filled with optimism, and suggested that this year the government would save between $10 million and $320 million. The reality, a deficit of $3 million, looks a lot less impressive.
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