Medicare Cost-Saving Groups Sign Up for Coordination Bid

The groups of U.S. hospitals and physician agreeing to coordinate care for Medicare patients has almost tripled this year to 154 as the organizations seek a share of $1.9 billion in additional government payments.

Medicare, the U.S. health plan for the elderly, signed up 89 new accountable care organizations this year as of July 1, including Mount Sinai Hospital in New York, the Department of Health and Human Services said in a statement today. About 2.4 million of Medicare’s 49 million beneficiaries get care from the groups, which promise to harmonize services and reduce waste in exchange for a share of savings they produce for the government.

At least 32 of the groups, including Presbyterian Medical Services and Banner Health Systems, have agreed to change the way Medicare pays them within three years. The groups will abandon the traditional fee-for-service practice in favor of a fixed-rate system for some Medicare beneficiaries.

None of the publicly traded hospital chains, such as HCA Holdings Inc. (HCA) or Community Health Systems Inc. (CYH), are participating in the program. Some of the nation’s highest- profile nonprofit health systems, such as the Cleveland Clinic, Mayo Clinic, and Kaiser Permanente, also have opted out.

The Congressional Budget Office has estimated that accountable-care groups will save Medicare as much as $4.9 billion through 2019. Medicare’s own actuaries predict a maximum of $940 million in savings for the government, while participating hospitals and physician groups may earn as much as $1.9 billion.

“Better coordinated care is good for patients and it saves money,” Health and Human Services Secretary Kathleen Sebelius said in the statement.

To contact the reporter on this story: Alex Wayne in Washington at awayne3@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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