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US lauds plan to rein in costs of Medicare

New tactics help four Mass. providers save nearly $150 million

Four Massachusetts health care organizations saved nearly $150 million in Medicare costs by coordinating care for patients and working to keep them healthy and out of hospitals, according to a federal report.

Those organizations — Beth Israel Deaconess Care Organization, Steward Health Care System, the doctors group Atrius Health, and the Mount Auburn Hospital doctors association — accounted for more than one-third of the nearly $400 million in Medicare savings nationwide under a pilot program that is testing a new system for delivering and paying for services.

A fifth Massachusetts health system participated in the pilot, but Partners HealthCare, instead of saving Medicare money, cost the program $17 million, according to the report.


The pilot program, launched in 2012, aims to lower the costs of Medicare, the government insurance program for the elderly, by providing more effective care. The program allows health systems to create pools of patients and doctors, known as Pioneer Accountable Care Organizations, and pays providers based on set budgets, instead of simply reimbursing them for every medical service and procedure.

Health care providers earn extra money for achieving high-quality outcomes. Those that fail to stay within their budgets and score low on quality measures must pay penalties.

Thirty-two health and hospital systems nationwide participated in the program, though several dropped out. Federal officials on Monday heralded the $384 million savings in 2012 and 2013 as proof the program is a success.

They said they have decided to expand it beyond the 600,000 patients it now covers — a fraction of the millions of Americans covered by Medicare.

The best performer in Massachusetts was the Beth Israel Deaconess Care Organization, a group of doctors and hospitals affiliated with Beth Israel Deaconess Medical Center; it saved $53 million for Medicare.

The for-profit hospital chain Steward Health Care System saved about $48 million.


Atrius Health saved $36 million, and the Mount Auburn doctors saved $10 million.

The analysis, issued by the Department of Health and Human Services, found that the savings came largely from a decline in hospital stays.

Emily Brower, executive director of accountable care programs at Atrius, said the Newton-based doctors group spent a lot of time trying to prevent hospital stays for high-risk patients by deploying doctors, nurses, and others to care for them before their conditions worsened.

Partners performed poorly in the new report, reversing a savings in 2012 to a loss in 2013.

Dr. Timothy Ferris, Partners’ senior vice president of population health management, said that he was puzzled by the report because it showed very different results than what federal officials released last year. The earlier report used a different method of analysis.

“We’re committed to this path of signing up for alternative payment systems,” Ferris said. “We’re going to have some wins and we’re going to have some losses, but we’re not going to give up trying.”

Federal officials have said they plan by 2018 to link half of all Medicare payments to alternative payment models that reward the quality of care.

Commercial insurers, including Blue Cross Blue Shield of Massachusetts, also offer quality-based payments.

Dr. Sanjay Shetty, president of the Steward doctors network, said the federal report is “a great reflection of the power of these alternative payment models.”

Shetty said Steward has moved rapidly to care for all of its patients under such models, which require intense coordination of care.


“We’re doing it because it’s critical to delivering value, ” he said.

Priyanka Dayal McCluskey
can be reached at priyanka.mccluskey@globe.com. Follow her on Twitter @priyanka_dayal.