Just yesterday, the Department of Health and Human Services announced on its website that, after two years in existence, the Pioneer Accountable Care Organization (ACO) program has saved the Medicare program $384 million in total, or $300 per Medicare beneficiary per year. Participating providers saved Medicare $279.7 million in 2012 and $104.5 million in 2013. That announcement marked an interesting point in the forward evolution of the ACO concept under the Medicare program.
According to the announcement, “The independent evaluation report for CMS found that the Pioneer Accountable Care Organization (ACO) Model generated over $384 million in savings to Medicare over its first two years – an average of approximately $300 per participating beneficiary per year – while continuing to deliver high-quality patient care. The Actuary’s certification that expansion of Pioneer ACOs would reduce net Medicare spending, coupled with Secretary Sylvia Mathews Burwell’s determination that expansion would maintain or improve patient care without limiting coverage or benefits, means that HHS will consider ways to scale the Pioneer ACO Model into other Medicare programs.”
Of course, that announcement came within the context of the Pioneer ACO program’s evolution, along a path that has had its share of stumbles and hiccups. A report released in October by the Centers for Medicare and Medicaid Services (CMS) found a very mixed bag of first-year results, with healthcare spending during the first year slowing by as much as 7 percent as a percentage of the benchmarks set for individual ACOs, but with some Pioneer ACOs actually seeing spending increases. Meanwhile, the Pioneer ACO program has been plagued with departures, which not surprisingly, included the dropping out of some of the most poorly performing ACOs, according to the report. As a result, a program that began with 32 participants in 2012 had been winnowed down to a field of 19 as of September of last year.
The leaders of most of those organizations that have dropped out of the Pioneer program have tended not to say much publicly, but…Alison Fleury, senior vice president, business development, at Sharp HealthCare, and the person who was CEO of Sharp HealthCare ACO last year when Sharp pulled out of the Pioneer ACO Program, shared with me in January some of the reasons behind Sharp’s departure from Pioneer. “One of the main things” behind Sharp’s dropping out, Fleury told me in January, “was the benchmark model in Pioneer, different from that in the MSSP”—the Medicare Shared Savings Program, the less intensely challenging of Medicare’s two ACO programs. The Pioneer Program, “she noted, “uses a national benchmark, so the benchmark does not reflect labor costs in your individual market. Our area wage index went up 8.3 percent, but our payments didn’t go up. And the Pioneer includes a disproportionate-share formula, but MSSP doesn’t. And disproportionate-share is based on your Medi-Cal proportion”—as the Medicaid program is known uniquely in California. In other words, the numbers were just too formidable for the Sharp folks to make a go of the Pioneer program.
Still, things continue to move forward in ACO land. For one thing, in March, HHS and CMS have created an entirely new model, the Next Generation ACO Model, which was created to encourage greater care coordination and closer care relationships.
What’s more, looking at the ACO landscape most broadly—meaning, scanning the landscape of all types of ACOs—all the different types under the Medicare program, as well as the very broad range of ACOs being developed in collaboration between private health insurers and providers, almost 70 percent of the U.S. population now lives in localities served by ACOs, and 44 percent live in localities served by two or more, according to a recently released Oliver Wyman report.
So… what’s "big"? Is $284 million "big"? More specifically, is an average of $300 per participating beneficiary, per year, a large amount of savings? On the surface, the answer is no, not in the context of how much could potentially be saved over the long term. And yet, it is a significant amount of money, and that is what is important here. $284 million, or $300 per beneficiary per year, is a decent start, an honorable start, for a program that has faced so many obstacles and that started out with so much ambition.
What’s more, we are very, very early in the Pioneer ACO program, after just two years, and more broadly, extremely early in the long journey towards accountable care in U.S. healthcare overall. Most importantly, the first learnings are only beginning to come into clear focus at this point, within the Pioneer ACO program, and more broadly—learnings around financial risk management, plan member attribution, the sharing of data between payers and providers, the marrying of clinical and claims data for analytic purposes, the precise ways in which different types of intensification of care management really make a difference in managing the care of patients and plan members with chronic diseases.
If one wants to look at the true potential for longer-term savings in the Pioneer ACO program and elsewhere, one should look at what has happened so far in the Blue Distinction Total Care Program, sponsored nationwide by the Blue Cross Blue Shield Association. As Antonio Linares, M.D., regional vice president and medical director at one Blues plan, Anthem Blue Cross, reported in a presentation at the HIMSS Conference in Chicago last month, the physician groups participating in that program have racked up savings of $9.51 per member per month, and reduced inpatient admissions by 7.65 percent, after just one year. What has been the source of such savings, which come along with improved clinical outcomes and improved plan member satisfaction? BCBSA has provided participation medical groups with a patient-centered care consultant, a community collaboration manager to develop learning collaborative content based on best national practices, and a provider clinical liaison to help practices develop care management skills. BCBSA has also provided participating physician groups with consultants to help them engage in analytics for care and cost management improvement.
And if such results can be gained on the commercial health plan side within just one year, then the potential for ACOs participating in all three of the Medicare ACO programs, including the Pioneer ACO program, is quite strong indeed. But it will take a few more years and a great deal of concerted effort, along with badly needed adjustments to the risk formulas, outcomes measure regimens, and other aspects, of all the Medicare ACO programs—Pioneer, Medicare Shared Savings Program (MSSP), and Next Generation.
But I will say this to all those Debbie Downers and Negative Nancys out there who seem to be rooting for the failure of all these programs: give them time. Literally. We are at the very beginning of a very long, very complex, very challenging journey in U.S. healthcare. And the first gains in both cost savings and clinical outcomes are just that—the first gains, the green shoots. All of this will take intense time, effort, and collaboration among all stakeholder groups to bring to maturity. And it will require intense informatics work, including very intense data analytics work in the service of continuous clinical and financial performance, in order to make it all gel. So time is on the side of every positive outcome, including cost savings. But it will absolutely take time, and good will from all the parties involved, and patience on the part of payers, providers, plan member-patients, and the public at large. So check back in a little while, and in the meantime, don’t sweat the small stuff, because this inevitably will be a marathon, not a sprint.