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With Two More Dramatic Departures, Is It Time for CMS Officials to Rethink the Pioneer ACO Program?

November 7, 2015
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The departures of the Steward Health Care System and MACIPA from the Pioneer ACO Program are jarring—and ominous

When the Boston Globe reported on November 3 that two Massachusetts healthcare organizations—the Boston-based Steward Health Care System and the Brighton-based Mount Auburn Cambridge Independent Practice Association (MACIPA)—were leaving the Pioneer ACO Program, that dual development became the latest in a series of worrisome developments around what had started out as a showcase program for innovative accountable care organizations (ACOs).

Indeed, the launch of the Pioneer ACO Program, even more than the launch of the Medicare Shared Savings Program (MSSP), both sponsored by the Centers for Medicare & Medicaid Services, under terms of the Affordable Care Act (ACA), had created a frisson of excitement at its inception back in 2012. And even on August 25, 2014, CMS officials were able to crow about some of the results coming out of the Pioneer ACO Program, when they announced on CMS’s website that “The Centers for Medicare & Medicaid Services today issued 2014 quality and financial performance results showing that Medicare Accountable Care Organizations (ACOs) continue to improve the quality of care for Medicare beneficiaries, while generating financial savings.  As the number of Medicare beneficiaries served by ACOs continues to grow, these results suggest that ACOs are delivering higher quality care to more and more Medicare beneficiaries each year.”

As CMS noted last August, “The 20 ACOs in the Pioneer ACO Model and 333 Medicare Shared Shavings Program ACOs generated more than $411 million in total savings in 2014, which includes all ACOs’ savings and losses. At the same time, 97 ACOs qualified for shared savings payments of more than $422 million by meeting quality standards and their savings threshold. The results also show that ACOs with more experience in the program tend to perform better over time.”

Still, the news this week was probably quite bitter for CMS officials, given that, with the departure of Steward and Mt. Auburn, the Pioneer ACO Program is now down to 16 participating organizations, or precisely half of the cohort of 32 that had started out in the program in 2012. Like several other ACOs, these folks in these two ACOs are switching programs, not dropping out entirely: both Mt. Auburn and Steward are shifting over to the new Next Generation ACO program, beginning on January 1, 2016. And in fact, as has been pointed out, “ACOs in the Next Generation ACO Model will take on greater financial risk than those in current Medicare ACO initiatives, while also potentially sharing in a greater portion of savings,” as Rajiv Leventhal’s news report noted. Indeed, the Globe report mentioned that according to the two organizations, “The rules make it more financially attractive to them than the earlier program,” referring to the Next Generation model.

Still, the challenges were there in Pioneer. The Globe reported that Mount Auburn Hospital’s physician network had saved about $14 million over three years in the Pioneer program, but it expected to lose money under new rules that reduced the budget it would have received to care for patients, according to Barbara Spivak, M.D., president of MACIPA.

So, not surprisingly, it is the financial challenges in Pioneer that are continuing to frustrate participating organizations. And these organizations are being led by people who are profoundly committed to the idea of accountable care. I interviewed executives from both Steward and Mt. Auburn for our August/September 2014 cover story. Asked why she and her colleagues decided to plunge into the Pioneer ACO Program, she told me last summer, “There were several reasons. One was that we as an organization believe that managing the care of patients provides better care, and that in order to effectively manage the care, you need to get data from the health plans. Particularly in an environment like ours where there is a lot of fragmentation of care, even more in the senior population than in the younger population, it’s very important to get information on where they’re going. And if you’re going to enhance their care, somebody has to pay for that. And the only way to get that is to enter into some sort of risk contract with a payer, in this case, Medicare.”