Seven Pioneer accountable care organizations (ACOs) that did not produce savings in the first year of the Pioneer program will switch to another ACO model—the Medicare Shared Savings Program (MSSP)—and two others in the Pioneer program will abandon Medicare accountable care models altogether, according to an announcement from the Centers for Medicare & Medicaid Services (CMS).

CMS did not specify which Pioneer ACOs have applied for transition into the Shared Savings program as well as which two would leave Medicare accountable care entirely, but it did announce the nine organizations leaving the Pioneer program: Primecare Medical Network, University of Michigan, Physician Health Partners, Seton Health Alliance, Plus (North Texas Specialty Physicians and Texas Health Resources), HealthCare Partners Nevada ACO, HealthCare Partners California ACO, JSA Care Partners, and Presbyterian Healthcare Services. Since the announcement by CMS, Healthcare Informatics has confirmed with spokespeople for Plus (North Texas Specialty Physicians and Texas Health Resources) and Presbyterian Healthcare Services that those are the two organizations leaving the Medicare umbrella initiative altogether.

This announcement comes at the same time that CMS announced positive and promising results from the first performance year of the Pioneer ACO model, including both higher quality care and lower Medicare expenditures.

All 32 Pioneer ACOs successfully reported quality measures and achieved the maximum reporting rate for the first performance year, with all earning incentive payments for their reporting accomplishments.  Overall, Pioneer ACOs performed better than published rates in fee-for-service Medicare for all 15 clinical quality measures for which comparable data are available. 

Initial indicators from the first-year results show that the Pioneers were able to slow cost increases. On average, costs for the more than 669,000 Medicare beneficiaries in Pioneer ACOs increased by just 0.3 percent in 2012, compared with 0.8 percent growth for Medicare fee-for-service beneficiaries, CMS said.

However, not all Pioneers were able to cut costs for their beneficiaries. Thirteen Pioneer ACOs produced shared savings with CMS, generating a gross savings of $87.6 million in 2012 and saving nearly $33 million to the Medicare Trust Funds. Pioneer ACOs earned over $76 million by providing coordinated, quality care, while two Pioneer ACOs had shared losses, totaling approximately $4 million. Program savings were driven, in part, by reductions that Pioneer ACOs generated in hospital admissions and readmissions, said the federal agency.

The University of Michigan Pioneer ACO, which includes more than 2,000 physicians from the University of Michigan Medical School’s Faculty Group Practice (U-M FGP) and the IHA physician group, is one organization that has decided to leave the program, reporting that it achieved cost savings of 0.3 percent for the Medicare system in calendar 2012. “We remain firmly committed to the concept of improving healthcare and containing cost growth via the population health model that drives all ACOs,” David Spahlinger, M.D., executive director of the U-M FGP, said in a statement. “This intended change from Pioneer to MSSP will allow us to continue that participation while simplifying our administrative structures and enhancing our partnerships with other physician groups,” he added.

Blair Childs, senior vice president for public affairs at the Charlotte-based Premier health alliance delivered a statement in the wake of the news that providers would be leaving the Pioneer program: “Dropping from the Pioneer program does not mean that providers are abandoning their investments or wavering on the concept of ACOs. Instead, many are moving from Pioneer to the less risky options in the Medicare Shared Savings Program. Others are not changing to MSSP, in some cases because of the existence of unnecessary regulatory barriers, and are instead applying their ACO investments to private contracts with insurers.  All organizations that participated in the Pioneer program deserve praise for stepping up to the plate and making investments in care delivery and risk-based payment. As early adopters, they blazed a trail that can be used to help other providers and CMS in making future modifications to the program,” he said.

Despite the news that nine Pioneers won't continue in the program for year two, CMS administrator Marilyn Tavenner emphasized the program’s positive results in its first year. “These results show that successful Pioneer ACOs have reduced costs for Medicare and improved the quality of care for their patients. The Affordable Care Act has given us a wide range of tools to realign payment incentives in Medicare and Medicaid, and these efforts are already paying off,” Tavenner said in a statement released by CMS.

Overall, more than 250 organizations participate in the Pioneer ACO model and the Medicare Shared Savings Program, serving 4 million Medicare beneficiaries, and more ACOs can join the Shared Savings Program each January.