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ACO Model Delivers Improved Health Care to Rural Areas and $48M Savings to Medicare

Rockville, Md.  –  A new study from Abt Global finds that a Centers for Medicare & Medicaid Services (CMS) infrastructure investment model saved the agency more than $48 million in its first year while promoting improved health care in rural and underserved areas. Abt led the study in partnership with the Center for Medicare & Medicaid Innovation, L&M Policy Research and J. Michael McWilliams (Harvard Medical School).  Findings were published online in the New England Journal of Medicine.

Supporting Rural Health Care
CMS developed the Accountable Care Organization (ACO) Investment Model (AIM) to improve health care delivery in rural and underserved areas. ACOs are groups of physicians, hospitals and other health care providers that participate in Medicare’s Shared Savings Program (SSP). The goal of the Shared Savings Program is for clinicians to deliver high-quality care to the patients who most often visit them while avoiding unnecessary spending.

Financing and inadequate capital for information technology have been cited by rural providers as significant infrastructure obstacles to ACO participation. Under AIM, up-front and ongoing payments to ACOs enabled them to overcome those initial operational barriers. CMS recoups the payments from the ACOs’ subsequent savings.  ACOs also receive bonuses from CMS if their savings exceed the payments they’ve received from CMS and their quality of care is robust.

Evaluating AIM
Abt analyzed Medicare claims and enrollment data for beneficiaries attributed to 41 AIM ACOs in their first performance year. These data were compared to data for similar beneficiaries who resided in the ACOs’ markets but were served by non-ACO providers. Key findings include:

  • AIM was associated with a $131 million reduction in aggregate Medicare spending.
  • Through up-front and ongoing payments, CMS invested $76.2 million in ACOs and paid an additional $6.2 million in bonuses.
  • After accounting for the $82.4 million provided to ACOs, AIM reduced CMS expenditures by $48.6 million. Decreases in the number of hospitalizations and use of institutional post-acute care contributed to the observed reduction in overall spending.

“With health care and related costs being a concern for most Americans,” said Abt Principal Associate and study coauthor Betty Fout, “it was encouraging to see evidence that confirms investments from CMS enabled providers in rural and underserved areas to improve their ability to provide care while reducing Medicare spending.”

About Abt Global
Abt Global is an engine for social impact, dedicated to moving people from vulnerability to security.  Harnessing the power of data and our experts’ insights, we provide research, consulting and technical services globally in the areas of health, environmental and social policy, technology and international development.

Eric Tischler
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