Unpacking the Pioneer ACO Program’s First Year Report Card

Unpacking the Pioneer ACO Program’s First Year Report Card

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

Don’t say we had no warning. In late February of this year, 30 of the 32 Pioneer ACOs sent a letter to CMS that expressed concern about the program’s quality benchmarks and requested reporting-based, as opposed to performance-based, payments for performance year 2013.

On July 16, CMS shared the results of the first year of the Pioneer ACO program, which were rather checkered. On the positive side, all 32 Pioneer ACOs successfully reported the required quality measures, and costs for the more than 669,000 Medicare beneficiaries in Pioneer ACOs grew by 0.3 percent in 2012 versus 0.8 percent for similar beneficiaries in the same year.

While 13 (40 percent) of the 32 Pioneer ACOs generated shared savings with CMS, the remaining 19 Pioneers did not. Nine of the Pioneers dropped out of the program, seven of which shifted to the less-risky “regular” Medicare Shared Savings Program (MSSP) and two, reportedly Plus (North Texas Specialty Physicians-Texas Health Resources) and Presbyterian Healthcare Services, did not apply to the MSSP. Thus, 10 (31 percent) of the Pioneers failed to produce shared savings in year one, but are staying in the program. With no shared savings or bonus payments from year one, the providers in those ACOs probably have adopted a “wait and see” attitude regarding the viability of the model and whether it rewards them adequately for their efforts. Especially for those Pioneers, this coming year could be the make-or-break year for them, since shared savings provide the economic engine to reward providers and sustain the ACO model.

We also shouldn’t be surprised by the mixed results of the Pioneer ACO program’s first year if we remember what happened with the Physician Group Practice (PGP) Demonstration (2005-2010), a precursor to the current Medicare ACO programs.

During the first year of the PGP Demonstration, only two of 10 participating ACOs produced shared savings. Encouragingly, in year two of the project, four of the 10 ACOs achieved some shared savings, and in each of the next two years, five of the participants generated shared savings. At least half of the PGP Demonstration ACOs improved their performance over time.

If the PGP Demonstration is a guide, we can expect the 23 Pioneers remaining in the program to achieve better results in general in subsequent years. There will be bumps in the road and continued uneven results—especially if CMS piles on additional required measures in the future—but more effective population health management implemented through the ACO model constitutes an inexorable movement that will ultimately improve quality and reduce cost.

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