The Obama administration touted ACOs as one of the most promising reforms in the 2010 federal health care law. The administration set a goal that by the end of 2018, half of Medicare spending currently based on the volume of procedures a doctor or hospital performs will instead be linked to quality and frugality. But, so far the ACO program generally has been a one-way street, with most doctors and hospitals happy to accept bonuses while declining to be on the hook for a share of any excessive costs run up by their patients.
After paying bonuses to the strong performers, the ACO program, in 2014, resulted in a net loss to Medicare of nearly $3 million, government records show.
ACOs are still in their infancy, and it is quite possible that performances will improve with experience and ultimately save significant sums for Medicare while improving care for beneficiaries. Nonetheless, the results are short of what Medicare projected in 2011 when it launched the program. Those estimates anticipated the government would save between $10 million and $320 million during 2014.
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