Looks like the Medicare Shared Savings Program, which offers financial incentives for hospitals, physicians and other healthcare providers to team up in Accountable Care Organizations  (ACOs), is starting to pick up speed.

Recently, 27 ACOs have entered into agreements with the Centers for Medicare & Medicaid Services (CMS), bringing the current total  to 65. The number of beneficiaries receiving care from providers participating in the program has grown to more than 1.1 million.

And CMS is currently reviewing more than 150 applications from ACOs looking to participate in the program in July.

So far, CMS has established 33 strict quality measures ACOs have to follow in order to provide appropriate, safe and timely care. These quality measures relate to:

• care coordination and patient safety
• appropriate use of preventive health services
• improved care for at-risk populations, and
• patient and caregiver experience of care.

Advocates of ACOs see them as a way to improve care to Medicare beneficiaries, while at the same time slowing the rising costs of healthcare by changing the incentives that influence how hospitals and physicians work.

As for patients, ACOs are designed to improve care, reduce costs and lift the frustration of disconnected care (i.e., lost medical charts among multiple providers, sharing the same info over and over again among different doctors, duplicate medical tests and procedures, etc.).

Initially, hospitals were expected to dominate ACOs. However, the majority of the 27 new ACOs are physician-led organizations.

So why aren’t more hospitals jumping on the ACO bandwagon?

It could be because starting an ACO isn’t something you can do over a lunch meeting. It’s a complex, expensive and time-consuming project that requires dedicated and skilled leadership.

Maybe other facilities are waiting to see whether the first ACOs can operate successfully.

More than likely, it’s a combination of both.

Industry experts believe even if the Affordable Care Act (ACA) is shot down, since the Medicare ACO program isn’t the controversial part of the law, it will be able to stand on its own. If it can’t stand on its own, CMS may turn the program into a demonstration project.

The point is, many experts believe ACOs are the model to be followed for the future whether the ACA gets the Supreme Court’s approval or not.

What’s your opinion? Are ACOs a viable solution to help facilities lower healthcare costs and increase quality of care? Share your opinion in the comments box below.

For more information on ACOs, click here.

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But ready or not, as of January 2014, the exchanges are here to stay. To help make sense of what providers and patients can expect, Health Affairs took a mufti-faceted look at the potential — good and bad — that the exchanges offer, including issues such as how the exchanges can remain efficient and offer sufficient choice, and the kinds of design choices that could impact who enrolls (and getting healthier people to join the exchanges).

The package also looks at the possibility of larger employers joining the exchanges once they’re eligible in 2017 — and if so, how that will impact the system.

Finally, a case study on Colorado’s earlier foray into a state-run health exchange provides one look at how the exchanges might operate.

To see all the details, visit Health Affairs.

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The need for outpatient facilities in particular is expected to increase as the industry adapts to the ongoing health reform and a move toward accountable care organizations. Outpatient facilities generally provide more access at the local level, and at a lower-cost care overall.

Another driver behind that activity is an expected increase in mergers and acquisitions. The company said that the anticipated activity — of both hospital mergers and the acquisition of physician practices — will create real estate dilemmas for the organizations involved.

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The suit was filed by the Arizona Hospital and Healthcare Association in the U.S. District Court in Phoenix.

The suit claims that the 5% rate cut will limit patient access to health care providers in violation of federal law that requires Medicaid payments to hospitals be sufficient to ensure “that beneficiaries have equal access to services.”

The Medicaid rate cut is expected to save the state $95 million this year.

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The report, State Trends in Premiums and Deductibles, 2003-2010, found that 62% of people live in states where health insurance premiums are equal to 20% or more of earnings for a middle income worker under 65.

On average, premiums for an employer-sponsored family plan increased by 50% between 2003 and 2010, to $13,871 annually. Even in the five “lowest-cost” states, premiums ranged between $11,379 and $12,409.

And employers aren’t picking up as much of the cost anymore. Since 2003, the employee-paid portion of health insurance has increased by 63% — far more than incomes have risen, and a higher proportion of the total cost.

But workers aren’t getting more for their money — they’re getting less. According to the report, only 52% of employees had a deductible in 2003; by 2010, it was 74%. And the size of the average per-person deductible has increased by a whopping 98% over the same time period.

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The committee was set up to find a compromise on how to cut $1.2 trillion in federal spending over the next decade. Failure to do so — which the committee officially announced on Nov. 21 — means the back up plan of “sequestration” takes effect. That means automatic cuts of that $1.2 trillion is cut from domestic and defense programs starting with 2013 spending.

Most directly affecting the health industry are planned cuts to Medicare — capped at 2%. Understandably, providers are worried about the effect that’ll have on their bottom lines.

The American Medical Association released a statement by President Peter W. Carmel, M.D., noting that cuts triggered by sequestration, along with the planned Jan. 1 physician payment cut of 27%, mean physicians may be forced to limit the number of Medicare patients they serve.

Similarly, the American Hospital Association’s statement warned that the cuts to Medicare will affect not just the elderly and disabled who rely on Medicare but their families who have to pick up the slack, as well as hospitals’ ability to provide essential services. The statement is available here (downloadable PDF).

“Sequestration means that arbitrary reductions in resources for patient care under Medicare will now be set to take effect under the law for the remainder of the decade,” Richard Umbdenstock, president and CEO of the American Hospital Association (PDF), said in a statement. “This will have an impact not just on the elderly and disabled beneficiaries of the program, but on their families,” he continued. “It will also have an impact on the ability of hospitals to provide essential public services to the communities they serve given the impact that Medicare has on the entire healthcare system. It is likely that Congress will reconsider whether this approach should take effect in January 2013 as required under current law.”

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That’s the takeaway of a new report by the Census Bureau (downloadable pdf). The report used a new experimental “supplemental poverty measure” to better determine the effect of health costs. The supplemental poverty measure adjusts for in-kind income, such as food stamps, as well as major costs like payroll taxes, in an effort to provide a more realistic picture of families’ incomes and expenses.

The measure indicates that when health care costs are subtracted from family incomes, another 10 million Americans would be classified as poor.

That translates into an increase of 3.3 percentage points of  the national poverty rate. And all age groups are affected: When health costs are taken into consideration, another 2 million children, 5 million working-age adults, and 3 million seniors fall below the poverty threshold.

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That’s the conclusion drawn from a recent report by the General Accounting Office (GAO).

A number of factors, play a role, including the variety of insurance benefit plans, inability of physicians to know in advance if certain tests or additional procedures will be likely, how much of a deductible a specific patient has already met, as well as the secrecy that surrounds the negotiated rates of payment between insurers and providers.

The lack of transparency is more than an annoyance.  It makes it harder for patients — whether insured or not — to make decisions about which non-critical tests and procedures are worth performing.

To see the full report, click here.

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According to the report, the company would offer a variety of plans, at different cost levels, through a health insurance exchange. The move would be allowed under health reform changes that take effect in 2014.

Walgreens wouldn’t confirm or deny the report, saying only that it was “looking into a number of options” to serve customers in the health system.

A number of companies — with or without prior experience in the health care industry — are expected to enter the market that’ll open up as more of the health reform provisions take effect.

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Between the sluggish economy and the impact of health care reform, the coming years are going to require a lot of changes from the health care industry in general and hospitals in particular. Kaiser Health News polled industry experts for their predictions on the top five trends to watch:

1. Mergers and consolidations
2. Reduced readmissions
3. Comparative effectiveness research
4. Care coordination
5. Collaborative communication

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