HHS Secretary Kathleen Sebelius (AP Photo/Carolyn Kaster)

The U.S. Department of Health and Human Services (HHS) says it has accepted 89 more organizations into a Medicare “accountable care organization” (ACO) program July 1.

The Centers for Medicare & Medicaid Services (CMS), an arm of HHS, earlier recruited 32 ACOs for another Medicare ACO program, the Pioneer ACO Model program, and it has signed six physician group practices up for a related, physician group practice transition demonstration program.

HHS now has a total of 154 organizations in voluntary ACO programs and related voluntary Medicare “shared savings” programs.

About 2.4 million Medicare enrollees, or 4.9% of all Medicare enrollees, are in shared savings programs, officials say.

The traditional Medicare program has been paying physicians on a fee-for-service basis, and it must work with all physicians willing to accept its rates and abide by program rules.

Policymakers have argued that the traditional payment approach encourages physicians, hospitals and other care providers to give patients too much care and gives the providers no incentive to work together to improve the quality of care or reduce the cost of care.

The Patient Protection and Affordable Care Act of 2010 (PPACA) included provisions creating the Medicare ACO test programs and the physician group practice program.

The ACO programs are supposed to give each participating group of physicians, clinics and hospitals and incentive to work together by basing some of the group’s reimbursement on the performance of the group as a whole. Officials are hoping they can move toward paying for care for a whole patient each year, rather than paying for care one service at a time.

“Better coordinated care is good for patients, and it saves money,” HHS Secretary Kathleen Sebelius said in a statement about the 89 newly designated ACOs.

The Obama administration is hoping the shared savings programs can save as much as $940 million over 4 years, officials say.

About half of the participating organizations are “physician-driven” organizations serving fewer than 10,000 Medicare enrollees, and that shows that smaller organizations are interested in participating in ACO programs and related programs, officials say.

ACO program critics say the Medicare problem will simply be dumping its problems on the ACOs.

James Capretta, a fellow at the Ethics and Public Policy Center, Washington, who once served on the staff of Sen. Pete Domenici, R-N.M., testified at hearing that ACOs will have trouble because they are inheriting the burden of an inefficient, government-dominated approach to paying for care.

One criticism has been that the last time payers tried to shift to paying for care on a whole-patient basis was in the mid-1990s, when health maintenance organizations tried to shift responsibility for managing care to physician group practices through “capitation” agreements.

Some the group practices that participated in the arrangements went bankrupt, and patients accused some of trying to manage costs by skimping on obviously necessary care.

HHS officials say the new ACOs will have to meet quality standards.

“For 2012, CMS has established 33 quality measures relating 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,” officials say.

CMS is encouraging organizations that want to operate ACOs in 2013 to submit ACO applications.