United States: Win, Lose, And Push: CMS Announces First Year Results On The Pioneer ACO Program

On July 16, 2013, CMS announced results from the first performance year of the Pioneer Accountable Care Organization (ACO) Model. In the release, CMS reported that the Pioneer ACO participants held Medicare cost increases below those for the general Medicare population, netting more than $33 million of savings to the Medicare Trust Fund for 2012. At the same time, it was mentioned that nine of the 32 Pioneer ACOs will not continue in the second performance year.

Background on the Pioneer ACO Model

The Pioneer ACO program is operated by CMS' Innovation Center and is distinct from the Medicare Shared Savings Program. Authorized under Section 3021 of the Affordable Care Act, the Pioneer ACO Model was designed for health care organizations and providers that were more experienced in offering coordinated care, including some who participated in the Physician Group Practice Demonstration project. The three-year Pioneer ACO Model utilizes a shared savings and shared risk model for the initial two years, with the risk and reward higher than is available in the Medicare Shared Savings Program. Positive performance on specified quality criteria provide enhanced savings to be shared, though in the initial year maximum credit for quality could be obtained by reporting on the indicated quality criteria. A requirement of the Pioneer ACO Model is that participants enter into shared savings or risk-type contracts with other payors so that more than 50 percent of the participant's revenues are derived from such arrangements by the end of the second performance year. In the third year, Pioneer ACO participants who have shown savings in the first two years are eligible to move to a population-based, per-beneficiary, per-month payment arrangement with CMS. Such beneficiary per-month payment is intended to replace some portion of the fee-for-service reimbursement the organizations receive from the Medicare program.

Thirty-two organizations from across the country were selected from a competitive application process to serve as Pioneer ACOs. They started in the program on January 1, 2012. There were 669,000 Medicare beneficiaries prospectively aligned with the 32 Pioneer ACOs in the initial year of the Pioneer program's operation.

Performance Results for 2012

In reporting on the results for 2012, the first performance year, CMS celebrated the savings generated for the Medicare program by the Pioneer ACO participants. CMS reported that of the 32 entities participating as ACOs in the Pioneer program, 13 shared in savings from CMS as a result of their performance reducing costs. The 13 Pioneer ACOs generated gross savings of $87.6 million in 2012, with a savings of approximately $33 million directly benefiting the Medicare Trust Fund. CMS reported that two Pioneer ACOs were obligated to return funds to the Medicare program under the sharing of loss aspect of the program, totaling approximately $4 million. The growth in Medicare expenditures for the Pioneer ACOs was held to 0.3 percent in 2012, materially better than for the general Medicare program. While only 13 received a share of savings, 25 of the 32 participants generated savings by reducing the risk adjusted readmission rates for their aligned beneficiaries.

CMS also reported the success achieved by Pioneer ACOs in providing higher-quality care. The Pioneer ACOs performed better on all 15 clinical quality measures than the general Medicare fee-for-service population. CMS also emphasized certain innovative approaches that Pioneer ACOs undertook to improve patient-centered care, including one ACO that dispatched hospital-trained nurses to patient homes to assist in managing prescription drugs, perform blood-sugar readings, and teach healthy eating.

At the same time as the CMS press release, it was announced that nine of the 32 ACOs have indicated they will leave the Pioneer ACO Model and not participate in the second year. It has been reported some of the nine will transition to the Medicare Shared Savings Program. One departing ACO stated that its efforts during the years prior to its participation in the Pioneer ACO Model to reduce costs and become more efficient made its ability to further reduce Medicare costs below the cost benchmark established for it under the Pioneer program more difficult and led to its inability to further reduce costs and share in any savings.

Other Governmental and Commercial Market Innovation

The Pioneer ACO Model is just one of many innovative programs introduced as part of the Affordable Care Act and by the CMS Innovation Center. These programs were designed to test changes in the reimbursement methodology to a more outcomes-based methodology and away from fee-for-service medicine. In addition to the Pioneer ACO Model, other programs intended to increase efficiency and quality while decreasing the provision of unnecessary care and saving Medicare program costs include the Medicare Shared Savings Program, the Bundled Payment Program, the Comprehensive Primary Care Initiative, and Primary Care Medical Home Programs, among others. The Affordable Care Act has also served as a catalyst for numerous commercial market programs in which providers are testing alternative delivery and reimbursement models to decrease costs and improve quality care.

Numerous health care providers have elected to participate in one or more of these governmental or commercial programs. More than 200 entities have elected to participate in the Medicare Shared Savings Program, representing well over three million Medicare beneficiaries. In commercial markets, providers are also contracting with managed care companies in innovative forms to further test different delivery and payment methods. Such contracted arrangements have providers sharing risk, participating in shared savings programs, and being paid for delivering quality care, all of which reward successful care coordination.

There also has been increased activity involving post-acute providers and ancillary providers such as ambulance companies, as they seek to participate in these various programs. Post-acute providers such as SNF's and home care agencies are partnering with acute providers to receive rewards for helping to reduce costly hospital readmissions and otherwise to manage costs.

Device manufacturers are also seeking ways to participate. In one example of an innovative transaction, the device manufacturer Phillips has partnered with Georgia Regents Medical Center and entered into a 15-year, $300 million agreement to focus on patient-centered care, where reportedly Phillips is sharing in the risk to improve performance and reduce costs.

Managed care companies are also acquiring providers in certain markets as they attempt to prepare for changes in health care delivery and reimbursement and regulatory changes affecting health insurers.

Market Awaits Results of Programs

The Pioneer ACO Model results are among the first results issued concerning performance under these innovative programs. While the results appear mixed, there were some wins, some losses, and some that could be viewed as a "push," with results likely to keep the providers in the program, but not returning expected financial rewards. As health care participants are testing various models and programs, they also are awaiting word on the results of these innovative structures. Depending on the results achieved, one may expect to see providers and others gravitating to the successful programs. Among the questions which may be answered once results are known, include:

  • Will the programs succeed in restricting health care costs while increasing quality?
  • Which ones will be most successful?
  • Are the benefits of participation equal to or greater than the infrastructure and other costs of participating in these programs?
  • Are the programs sustainable, that is, do they provide for changes that will lead to reduced costs and rewards for providers over the longer term?
  • How quickly will the overall market adapt to these new delivery and payment system structures?
  • Will providers continue to have a challenge in dealing with both significant fee for service business that rewards productivity while also being rewarded in other portions of their business for successfully reducing costs?

Critics have also raised questions as to whether shared savings programs such as the Pioneer ACO Model and the MSSP, which rely on bringing costs in below an established cost benchmark, can be sustainable over many years. Improvements in cost reduction in one year lead to new cost benchmarks in subsequent years, set at lower levels reflecting the cost reductions achieved in the prior year. That reduction makes it harder to meet cost benchmarks in the subsequent year. As noted above, one of the Pioneer ACOs electing to depart from the Pioneer ACO Model sighted the difficulty of continuing to reduce costs off a base reflecting its prior success in managing costs as a reason for electing to cease participating in the Pioneer ACO Model. These comments raise interesting questions about the baselines used for comparison between pre- and post-ACO implementations. The agency and provider stakeholders will need to address any unintended disincentives for provider groups that already operate compelling cost control and quality improvement programs from participating in CMS's ACO programs. Critics have questioned whether providers will be able to continue to show cost improvement in such a model, and thus whether such model and other similar ones are sustainable over the longer term.

Summary

The initial results from the Pioneer ACO Model show some encouraging results, but many questions remain for providers as they assess alternative reimbursement and delivery models.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions