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Hospital Report

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The premier resource for hospital professionals from Relias Media, the trusted source for healthcare information and continuing education.

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: While there are more ups than last year, Pioneer ACOs also had their share of downs.

While 32 organizations were originally selected to be Pioneer ACOs, that number is now down to 23. 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 http://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2014-Fact-sheets-items/2014-09-16.html:

  • The 23 member Pioneer ACOs generated $96 million in total savings, and saved $41 million for the Medicare Trust Fund, up from $87.6 million and $33 million last year, 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 http://www.californiahealthline.org/road-to-reform/2014/why-one-pioneer-aco-quit-the-program-and-what-the-decision-reveals-about-aca.

And, as I was writing this, news broke that three more ACOs decided to leave the Pioneer program http://www.modernhealthcare.com/article/20140925/NEWS/309259938?AllowView=VDl3UXk1T3dDUEdCbkJiYkY0M3hlMHFyaWtVZENlND0=&utm_source=link-20140925-NEWS-309259938&utm_medium=email&utm_campaign=mh-alert . One company, Franciscan Alliance, plans to join the Medicare Shared Savings ACO program.

So 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 CEO Alison Fleury told California Healthline. 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. Michigan-based Genesys PHO, which just announced its exit, also cites the payment model as a detriment. The organization faced penalties in both years of the program.