ACO Saved CalPERS a Total of $37M Over Two Years, Report Finds

An accountable care organization that serves thousands of CalPERS beneficiaries in the Sacramento area saved the agency a total of $37 million in 2010 and 2011, according to a report published Thursday in the journal Health Affairs, the Los Angeles Times reports.

Background

Under the federal health reform law, Medicare officials are awarding contracts to insurers, hospitals and physicians who form ACOs. ACOs seek to coordinate patient care and improve care quality and efficiency.

In 2010, Blue Shield of California, Dignity Health and Hill Physicians Medical Group formed an ACO to serve 41,000 CalPERS beneficiaries in the Sacramento area.

Report Findings

The report -- by Paul Markovich, Blue Shield's president and incoming CEO -- found that health care costs per CalPERS beneficiary decreased by 1.6% to $393 monthly during the first year, while the average cost for beneficiaries outside of the ACO increased by 10% to nearly $436 monthly during the same period.
The report attributed a significant portion of the savings to shorter hospital stays.

It found that:

• The number of inpatient days and hospital readmissions decreased by 15% in the first year; and
• The number of hospital stays lasting longer than 20 days decrease by 50% during that time.

Markovich said many of the reductions were the result of improve oversight of patients discharged from the hospital.

He said the oversight efforts included:

• Reviewing discharged patients' prescriptions for potentially harmful drug interactions;
• Checking in with patients by phone within 48 hours of discharge; and
• Booking a doctor's appointment for patients within 10 days of discharge.

CalPERS said it is pleased with the savings and plans to expand the ACO to Orange County and other areas.

National Attention

Last year, HHS Secretary Kathleen Sebelius said the ACO is on the federal government's "radar" screen as a model for stakeholders looking for ways to curb rising health care costs.

However, experts say they are unsure about whether the idea can work on a larger scale or in areas where care is more fragmented.