The ups and downs of Pioneer ACOs

March 18th, 2015

The numbers are in for this year’s look at the experimental Pioneer Accountable Care Organization, and while there are more ups than last year, Pioneer ACOs also had their share of downs.

The Pioneer ACO program began in 2012 with 32 organizations, though nine dropped out or moved to the Medicare Shared Savings ACO program in 2013. The new numbers reflect the performance of the remaining 23 ACOs throughout 2013 -- but that number has just been reduced again. The Affordable Care Act established the experimental ACOs to test the model to cut costs to physicians and Medicare through quality improvement. Physicians are reimbursed on the basis of quality, rather than volume.

According to numbers released by the Centers for Medicare & Medicaid Services:

• The 23 member Pioneer ACOs generated $96 million in total savings in 2013, and saved $41 million for the Medicare Trust Fund, up from $87.6 million and $33 million in 2012, respectively. The ACOs also qualified for $68 million in bonuses.
• Per capita growth in spending was 1.4% -- 0.45% lower than Medicare fee-for-service spending growth.
• Improvements were made in 28 of 33 quality measures, including blood pressure management, screening for future fall risk, and patient experience in health promotion and education.
• Mean quality score went up 19% to 85.2%.

And now for the downs: While 11 Pioneers earned bonuses, three others has shared losses. CMS did not provide numbers on those losses. Three other ACOs deferred evaluation until the close of year three. San Diego-based Sharp HealthCare pulled out of the program due to risk of shared loss, even though the ACO was performing favorably.

As I was writing this, Modern Healthcare reported that three more ACOs decided to leave the Pioneer program, and that one of those companies plans to join the Medicare Shared Savings ACO program.

Now the question remains: If the savings numbers are going up, what’s causing organizations to leave? The way Medicare benchmarks payments, including disproportionate-share hospital payments, is an issue, Sharp HealthCare explained in financial statements. So while the ACO was hitting quality improvement targets, the payment formulas meant that the organization was going to break even rather than share in savings and bonuses. It is possible the other ACOs exited for similar reasons: That while they were performing well, saving money for Medicare, and hitting quality targets, they were not sharing in the savings and were, in fact, sharing in losses from other ACOs.

Looks like the Pioneer ACO program still has a long way to go.