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A Glass Half-Empty Or a Glass Half-Full? Parsing the ACO Evidence in Real-Time

September 21, 2014
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How optimistically or pessimistically should one view the results published last week by CMS of results from its two ACO programs?


Inevitably, there is push and pull, action and reaction, in events out in the world. Certainly, this was the case with last week’s announcement  on the part of the federal Centers for Medicare & Medicaid Services (CMS) of the results from the Pioneer ACO program, in the past year, and from the regular Medicare Shared Savings Program (MSSP) for ACOs, in the past two years.

As reported on our website, CMS issued an announcement that highlighted shared-savings payments to participating ACOs in both programs that combined to total $445 million, an impressive sum, at least at first glance. What’s more, both Pioneer ACO participant organizations and MSSP organizations made some solid gains. Among the Pioneer ACOs, 11 earned shared savings, while only three generated shared losses, and three elected to defer reconciliation until after the completion of performance year three. Meanwhile, 53 MSSP ACOs held spending $652 million below their targets, and earned performance payments of more than $300 million as their share of program savings. An addition 52 ACOs in that program reduced health costs compared to their benchmark but did not qualify for shared savings. But the MSSP ACOs also collectively improved on 30 of 33 quality measures.

Of course, these results do not account for the departure of ten of the original 32 Pioneer ACOs since the program’s formal inception in January 2012, with nine of those ten leaving in July 2013, and Sharp HealthCare leaving less than a month ago. So those determined to see a glass half-empty (if even filled to that level), will have plenty of evidence for their viewpoint.

There are even those, including Advisory Board Company executive Tom Cassels, who believe that Medicare’s ACO programs are not sustainable as currently architected. As Cassels told me last week, a day after the CMS announcement,  “Let’s think about this from the perspective of Sharp HealthCare, one of the pioneers that moved out of the Pioneer program. They didn’t move out because the feasibility of delivering appropriate-cost, high-quality care was not part of their DNA or because that model was not desirable to enrollees. They moved out because the actual viability of the financial model of shared savings is not shared sustainable for them. What is sustainable,” he told me bluntly, “ is a robust Medicare Advantage program,” which he believes is better positioned for the future, in that Medicare enrollees actually chose their Medicare Advantage plans, rather than passively becoming ACO plan members through attribution.

Indeed, attribution and patient engagement remain big challenges for all the ACOs. As the Steward Health Care System’s Dominique Morgan-Solomon told me this summer, “The most difficult piece…has been beneficiary engagement. So one of the challenges we’ve had, because we’ve been trying to do population health for all groups covered; the challenge has been, that’s great on this side, but it requires beneficiaries’ knowledge and engagement with us as a provider. And they’re not always sure they belong to us. So,” she told me, “you’ll potentially have a beneficiary who has seen one of our providers a few years ago, maybe via a specialist in our network, but their primary care provider is with a different system. So one of the challenges has been, how do you get these beneficiaries engaged, because in some cases, they haven’t realized they’re attributed to us. And they have to opt in, and they get letters from CMS, but you can imagine, of course, that there are populations that may not have caregivers who explain everything to them; so we’ve had to get creative there.”

Meanwhile, it appears very much that the Sharp HealthCare leaders chose to pull out of the Pioneer ACO Program because of the way in which data points were measured for reward in the program. As I referenced in a blog at the beginning of this month, California Healthline reported that Sharp executives had publicly pulled the plug on their participation on the program on Aug. 26. The California Healthline story went on to say that “Alison Fleury, CEO of Sharp’s ACO, said the system broken even during the first two years of the program and reduced readmission rates while improving its quality metrics. Sharp also was on track to meet quality benchmarks, and was not at risk of losing its Medicare funding, according to Fleury. She attributed Sharp’s decision to drop out mostly to the financial model of Pioneer ACOs, saying, ‘Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance.’”

The California Healthline article went on to note that San Diego’s area wage index had increased by 8.2 percent between 2012 and 2014, but because the Pioneer model does not take that into account, health systems have not received amplified regional payments.