A study published in the Journal of American Medical Association reports the findings of a pilot program that was run between 2012 and 2013 aimed at cutting Medicare spending. As part of the program, hospitals and doctors were offered guidelines that cut wasteful spending and improve management for patients with chronic diseases such as diabetes. During the two-year program, some $384 million were saved and returned back to hospitals, all without limiting coverage or benefits. In light of these findings, it’s likely that the program will expand to other parts of Medicare.

medicare benefits

Image: diabetribe.org

The program called  “32 Pioneer Accountable Care Organizations” involved asking hospitals and doctors to follow 33 quality and care standards for Medicare fee-for-service patients. Basically, doctors were asked to closely monitor their sickest patients and better coordinate their care to reduce wasteful spending. From the patient’s side, the program moved  from the traditional fee-for-service payments where hospitals charge for every procedure to  a fixed monthly stipend for individual patients.

“An innovative payment model created as a pilot project by the Affordable Care Act generated substantial savings to Medicare,” said Health & Human Services Secretary Sylvia Mathews Burwell on Monday in a speech at the American Hospital Association conference in Washington. “The model has delivered high-quality patient care without limiting coverage or benefits.”

In the first year, 4 percent savings were made, or a total of $212 million, and less than 1.5 percent, or $105 million in the second year. Program coordinators cite grasping the “low hanging fruit” for more savings in the first year, relative to the second. This suggest that savings will incrementally go down. Not all hospitals were successful using the program, however, since 13 of 32 organizations that initially joined have exited.

Medicare is especially designed for the elderly and disabled. Last year it spent  $512 billion catering to 50 million patients.

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