An in-depth look at six cost containment programs in the Affordable Care Act

May 22, 2014

A cartoon of health care symbols and a clipboard.This paper describes six cost-containment policies or initiatives included in the Affordable Care Act (ACA) that target how health care is delivered and the growth of health care costs. A summary of the implementation occurring in Michigan is also provided.

The policies or initiatives explored in depth here are:

  1. Accountable Care Organizations
  2. Hospital-Acquired Conditions
  3. Value-Based Purchasing
  4. Hospital Readmission Reductions Program
  5. Center for Medicare and Medicaid Innovation
  6. Program Integrity

An accountable care organization (ACO), for example, is a network of providers clinically and financially responsible for the entire continuum of care for a group of patients. Depending on the arrangement, providers, hospitals, and health insurers may share responsibility for the patient’s care. Following the passage of the ACA, the Centers for Medicare & Medicaid Services (CMS) began developing programs for Medicare providers using the ACO model

There has been much discussion of the coverage provisions of the ACA but the law also includes robust cost containment provisions. Although each of the policies highlighted here is in nascent stages of implementation, all are premised on prior demonstration programs or experiments in the public and private sectors. Evidence currently available for these policies and initiatives, such as the ACOs discussed earlier, currently points to moderate effectiveness in reducing costs, and at least some successes in improving quality. Many of these initiatives may be synergistic, together creating a more significant effect on the delivery system than each individually.