New partnerships aim to lower Medicare costs, improve care


The Obama administration Monday announced new partnerships with 32 of the nation’s leading medical providers that have agreed to work with the federal government to improve the quality and lower the cost of care for Americans who rely on Medicare.

The partnerships, which are to reward doctors and hospitals that save money while improving care, are a key initiative sparked by the healthcare law the president signed last year.

Proponents believe the strategy may offer the best hope for controlling federal healthcare spending, providing better incentives to medical providers that take greater responsibility for managing patients’ care.


Many conservatives, who view this skeptically, say Medicare should instead let private health plans selected by patients take charge of managing beneficiaries’ care.

But the Obama administration hopes the 32 providers named Monday can show the promise of its strategy to leverage the federal government’s power to get better results at lower costs.

Secretary of Health and Human Services Kathleen Sebelius said these “Pioneer Accountable Care Organizations” will be able to save Medicare as much as $1.1 billion over the next five years and become “role models for the rest of the country.”

Many already have experience coordinating patients’ care, so patients don’t bounce between doctors and hospitals with little communication among providers, a major weakness of America’s fragmented healthcare system.

Under the terms of the partnerships, each provider will assume financial responsibility for the care of a group of Medicare beneficiaries.

If the provider can provide that care more efficiently, it will share any savings with the federal government.


To prevent providers from skimping on care -- a phenomenon that undermined public confidence in managed care a generation ago -- participants in the new program will have to hit a series of quality benchmarks. And Medicare beneficiaries unhappy with their care are free to leave any time they want, according to the Department of Health and Human Services.

The administration also is requiring participating providers to develop similar arrangements with private insurance carriers for their non-Medicare patients.

The 32 providers selected are heavily concentrated in just four states, with six in California, five in Massachusetts and three each in Michigan and Minnesota.

“We’re pretty excited around here,” said Don Crane, president of the California Assn. of Physician Groups. “This is a large step forward for Medicare, and for the entire healthcare delivery system.”

Nearly 50 providers that applied to participate were not selected, according to Health and Human Services.

A full list of the participating groups is available here.