Success of government’s ACO pilot could mean changes in Medicare shared savings program

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The federal government said Monday that its innovative Medicare pilot, the Pioneer Accountable Care Organization, has both saved money and delivered high-quality care, and that elements of Pioneer will be incorporated into the larger Medicare shared savings ACO program that now involves more than 400 health care organizations in the U.S.,…Dr. Patrick Conway, acting principal deputy administrator for the Centers for Medicare and Medicaid Services, told reporters during a conference call that, based on the success of Pioneer, CMS wants Medicare ACOs to assume two-sided risk: as with Pioneer, health care providers would have the chance to share in a higher percentage of the savings that Medicare realizes form an ACO, but would also have to pay back some revenue to Medicare if those savings don’t pan out.

Conway said that, of the 32 original Pioneer ACOs, 13 dropped out of the program, and two had to make repayments to Medicare.

None of the Pioneer ACOs is in New Jersey. CMS said Monday that an independent evaluation concluded that Pioneer generated over $384 million in savings to Medicare over its first two years, in 2012 and 2013, or an average of $300 per participating beneficiary per year — while continuing to deliver high-quality patient care.

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Conway said the Pioneer ACOs provide coordinated medical care that helps keep Medicare members out of the hospital, as well as reducing hospital readmissions.

“This is big news,” said Joel Cantor, director of the Rutgers Center for State Health Policy. “The ACA created authority for the federal government to widely adopt innovations that reduce costs and improve care, and this model is the first to meet that test.”

Cantor said, “Health care providers today face a barrage of performance incentives from different programs and insurers, and the success of the Pioneer model suggests that performance can improve more when providers operate under a single set of clear incentives.”

CMS said that, so far, the broader Medicare ACO shared savings program has generated over $417 million in total savings for Medicare. Three New Jersey Medicare ACOs have so far saved Medicare money, and shared in those savings: Optimus Healthcare Partners, which includes more than 500 physicians and the hospital system Atlantic Health; Meridian ACO, which is affiliated with Meridian Health; and Hackensack Physician-Hospital Alliance ACO, which is affiliated with the Hackensack University Health Network.

Jeff Brown, executive director of the QI Collaborative at the New Jersey Health Care Quality Institute, pointed out that, unlike the standard Medicare shared saving model, the Pioneer ACO providers had to agree to bear substantial financial risk to participate. “Thus, if they are unable to control costs, they can end up owing more money to CMS. Successful Pioneer ACOs have shown to be adept at advanced population health management, risk management, and have made the necessary investments in data, information technology and workforce to effectively improve quality and reduce costs.”

Brown said: “In terms of expansion of the model, it will be interesting to see how CMS chooses to proceed. They have already incorporated elements of the Pioneer program into their “Next Generation ACO Model,” which was announced in March. He noted that CMS isn’t accepting new applicants into the Pioneer program, and said CMS expects about 15 to 20 Next Generation ACOs nationwide in the first of two rounds of applications. 

“I think this shows that advanced payment models with substantial provider risk can be highly successful — but the organizations involved must have the right pieces in place to make them work,” Brown said.

Health and Human Services Secretary Sylvia M. Burwell said, “The Pioneer ACO model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large.”

Conway said this is Year Four of the five-year Pioneer pilot, after which the Pioneer ACOs will likely transition to a retooled Medicare ACO program that incorporates ideas successfully tested by Pioneer.

HHS announced in January that it wants to tie 30 percent of Medicare payments to quality and value through alternative payment models like ACOs by 2016, and 50 percent of payments by 2018. Conway said about 7.8 million Medicare members are currently covered by alternative payment programs.

Conway said among the Pioneer features that will be extended to the larger Medicare ACO program will be enabling Medicare members to choose their ACO, instead of assigning Medicare members to an ACO in their geographic area.

He said this will enable the ACO to “deliver more holistic care. It is an important design element that will help (the ACO) manage their patients and empower patients to make a proactive choice about who their ACO is.”

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