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A key component of the Obama administration's efforts to reform Medicare is a program that financially rewards doctors for reducing costs compared to a benchmark.
That was a tough hurdle last year for Philadelphia-area doctors participating in so-called Accountable Care Organizations, or ACOs. None of the nine in the region earned a bonus for 2015, according to data from the Centers for Medicare and Medicaid Services.
LHS Health Network, affiliated with Lourdes Health System, in South Jersey, came close. The group of 140 primary-care physicians provided care for 25,818 beneficiaries for $6.66 million less than Medicare's benchmark.
But LHS needed to achieve $6.9 million in savings off its benchmark of $288 million to be allowed to keep half the money saved, Jennifer Schwartz, executive director of LHS, said Tuesday.
"You could say we've saved the government essentially $6.6 million, and we've received nothing in return. That's frustrating," Schwartz said.
In 2014, the region's biggest ACO, Delaware Valley ACO, earned $6.6 million for its performance, but it was out of the money last year, spending nearly 2 percent more than its benchmark of $780 million.
Delaware Valley ACO said in an email that it was not surprised that it missed out on the bonus in 2015, given the fact that it doubled in size to 70,628 beneficiaries from 33,310 in 2014.
"Our transformational work is ongoing, and as we grow dramatically each year, we are continually orienting and working with a very different population of physicians and Medicare beneficiaries," the email said.
Even without a big change in the number of physicians in an ACO, a difficulty is that the patient pool attributed to an ACO can change, impacting the ability to coordinate care over a longer period.
"We're now in our fourth year of the Medicare program and almost every quarter we've had almost 15 percent to 20 percent turnover in the total population of patients," said Alfred Campenella, executive vice president for strategic business growth and analytics at Virtua.
VirtuaCare, which had 16,972 beneficiaries last year, overspent its $158.5 million benchmark by nearly 9 percent.
A challenge for Virtua, Campenella said, is that its average benchmark cost per beneficiary based on historical costs is already low, at $9,336. That is the second-lowest in New Jersey, behind AtlantiCare Health Solutions Inc., at $9,120. The median in New Jersey is $11,300.
Quality Health Alliance-ACO, affiliated with St. Mary Medical Center, in Langhorne, had the Philadelphia region's highest average benchmark for its 14,684 beneficiaries, at $11,610. Overall, Quality Health performed 0.39 percent better than its $170.5 million benchmark.
"We must have had higher-risk patients, or a sicker population, which would allow Medicare to allot more dollars to the health care of those folks," said Aldo Ciccotelli, a family physician in Langhorne who is chief medical officer for the St. Mary ACO.
Despite the lack of bonuses, operators said they remain committed to the model.