Keeping the 2014 Medicare ACO Results in Perspective

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

Ken Perez
Ken Perez

“We have to take the long view, and be focused on iterating, evolving, and improving the concept, rather than seeking summary judgment.” – Farzad Mostashari, former national coordinator for health information technology, commenting on accountable care organizations

On Aug. 25, 2015, the Centers for Medicare and Medicaid Services (CMS) released 2014 financial and quality performance results for 353 accountable care organizations, 333 in the Medicare Shared Savings Program (MSSP) and 20 in the Pioneer ACO Model (although as of this writing, the CMS website only lists 19 Pioneer ACOs). As is customary, proponents (such as CMS) and critics of ACOs interpreted the results quite differently, as a glass half-full or half-empty.

Pioneer ACO Performance

During the third performance year, the Pioneer ACOs generated total model savings of $120 million. That figure constitutes a 24 percent increase versus the $96 million of savings produced during the previous year. A total of 15 ACOs (75 percent of all Pioneers) were able to generate savings during performance year three, compared with 14 ACOs (61 percent of all Pioneers) for the prior year. Of those generating savings in the most recent performance year, 11 Pioneers produced savings that exceeded the minimum savings rate, garnering shared savings payments totaling $82 million. One quarter of the 20 Pioneers generated losses, with three generating losses beyond a minimum loss rate, requiring them to make $9 million in shared-loss payments to CMS.

The Pioneers improved the quality of care delivered during performance year three, as their mean quality score rose from 85.2 percent to 87.2 percent year-to-year. The Pioneers improved in 28 of 33 quality measures and generated average improvements of 3.6 percent across all quality measures compared to Performance year two. CMS highlighted significant improvement in medication reconciliation (up from 70 percent to 84 percent), screening for clinical depression and follow-up plan (up from 50 percent to 60 percent), and qualification for an electronic health record incentive payment (up from 77 percent to 86 percent).

Moreover, Pioneer ACOs improved the average performance score for patient and caregiver experience in five out of seven measures compared to performance year two.

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ACO Cost Reduction: First Year a Pipe Dream?

ACO Cost Reduction: First Year a Pipe Dream?
Perez

Guest post by Ken Perez, healthcare policy and IT consultant.

When he was leaving his post as the head of the Centers for Medicare and Medicaid Services, Dr. Donald M. Berwick famously said that 20 percent to 30 percent of healthcare spending is waste that yields no benefit to patients.

Given that large amount of waste, surely then, one would have thought that almost all of the original 32 Pioneer ACOs—many of which are generally considered the most sophisticated healthcare organizations in the nation—should have been able to shave a few percentage points off their costs during their first year in the program and therefore, meet or beat their expenditure benchmarks.

As we know from a July 16 press release from CMS, that was not what happened. While all of the Pioneer ACOs successfully reported the required quality measures, a majority—60 percent failed to produce shared savings, missing their cost-reduction (or more accurately, cost curve bending) targets. Moreover, two of the pioneers incurred sufficiently large losses requiring penalty payments to CMS.

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Dog Sledding and ACOs: What Do Health IT Leaders Do When the Lead Dogs Fail?

Ken Perez

Guest post by Ken Perez, Director of Healthcare Policy and Senior Vice President of Marketing, MedeAnalytics, Inc.

Recently, Mitch Seavey, 53, became the oldest winner of the Iditarod, the most famous dog sledding race in the world. At a distance of 1,600 kilometers, the Iditarod constitutes a race of supreme endurance. In dog sledding, the dogs that are chosen to lead the sled are usually the smartest, as well as the fastest, and they are appropriately called lead dogs.

The lead dogs in the realm of Medicare ACOs are the 32 pioneer ACOs, the selection of which was announced in December 2011 with great fanfare and optimism. With the greater risks (and rewards) of the pioneer ACO Model, the pioneers were widely considered the best and the brightest, the organizations most likely to succeed as ACOs.

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