Time is running out for several undecided Medicare Pioneer accountable care organizations to choose whether to stay or go.
The CMS recently announced that as many as nine provider organizations will make an early exit from the most ambitious federal test of accountable care, an experiment under the 2010 health reform law to overhaul payment to doctors and hospitals. The trial was launched in early 2012 as the Center for Medicare and Medicaid Innovation's Pioneer accountable care program, which sought to try out the payment model with hospitals and medical groups believed to be the most experienced and prepared for its financial risks.
Pioneers have until the end of July to decide. At least four of the 32 organizations have notified the CMS of tentative plans to switch out of the Pioneer program and join 250 other ACOs in Medicare's alternative test of the payment model, known as the Shared Savings Program. That model allows ACOs to opt for a payment arrangement that does not include the risk of financial losses.
The uncertainty of some Pioneer ACOs—just one year into the test to see if accountable care can deliver the quality gains and spending restraint hoped for by its proponents—raises questions about how successfully the largely untested payment model works in practice. ACOs are one of the key delivery system reforms established by the Patient Protection and Affordable Care Act, and thus are being closely watched. But experts said all along that the ambitious delivery-system changes envisioned in the ACO model would be difficult and take time to achieve.
The potential setback comes even as accountable care contracts between private payers and providers have increased and, the National Academy for State Health Policy reports, several states have endorsed or moved to adopt accountable care under Medicaid.
The ACO model is intended to reward providers that meet quality and cost-control targets with a share of money they save on patients' medical care. Pioneers also face financial losses if patients' healthcare costs exceed the target. Performance on quality measures directly affects ACOs' financial payouts. Ones that perform well on cost-control targets but poorly on quality measures do not receive a share of the savings. ACOs can see financial penalties reduced even if spending exceeds the target with strong performance on quality measures.
Pioneers that may exit the program have yet to say much publicly about why they may leave.
The chief executive of Presbyterian Healthcare Services in Albuquerque has previously said his system is negotiating with Medicare over difficulty with the design of the accountable care test. Presbyterian has yet to decide whether to opt out.
One challenge with the model is that Presbyterian and other Pioneers cannot limit patients' choice of hospitals or doctors but still must answer for the cost and quality of patients' care whether provided inside or outside the system, Jim Hinton, Presbyterian's president and CEO noted in May. Hinton also said data from the CMS that Pioneers need to monitor their performance has been delayed, a complaint echoed by other Pioneer executives during the program's first year.
Sharp HealthCare in San Diego is “evaluating our continuation in the Pioneer ACO program in light of the evolving structure of the program,” and will decide by July 15, spokesman Tom Hanscom said in a prepared statement. He said Sharp officials would not make any additional comment before then. The ACO, however, continues to operate.
In Minnesota, Minneapolis-based Allina Health is unsure. Also ambivalent are Arlington-based Texas Health Resources and North Texas Specialty Physicians, which jointly entered into an accountable care Medicare contract for their Plus ACO, based in Fort Worth. Officials with the organizations declined interviews.
More than 200 primary-care physicians who organized another Pioneer ACO in Denver, Physician Health Partners, will review the latest performance data from Medicare and other data sources in coming days, spokeswoman Abby Brookover said in an e-mail. Officials declined to discuss any decision about the program until then, she said.
CMS Weighs In
The CMS emphasized the Pioneers that chose to switch to the Medicare Shared Savings Program rather than abandon ACOs altogether. “We're encouraged that these organizations want to continue in programs that promote better care at lower costs,” said CMS spokesman Alper Ozinal. “We fully anticipated that as these programs get up and running, some organizations would shift between models.”
Tension and leadership turnover have marked the start of the Pioneer program's second year, which began in January. Pioneers face tougher quality performance measures in the second year, which quickly surfaced as a source of tension between the ACOs and Medicare. Federal officials proposed a compromise in April, but have not yet released final details. Meanwhile, the CMS last month announced the unexpected departure of Dr. Richard Gilfillan, the Innovation Center's top official.
Pioneer ACO performance results are not yet publicly available for the first year, which ended last December. Nonetheless, the financial risks for participation grew more aggressive in the second year.
The upheavals and challenges, however, have not discouraged other Pioneer participants. “It's been a tremendous learning experience for us,” said Stuart Lockman, president of the Michigan Pioneer ACO, which was formed by Vanguard Health Systems' Detroit Medical Center and will continue in the initiative. The Detroit ACO constantly fine-tunes efforts as the organization learns from its care management, quality and cost-control efforts under the program, he said.
Michigan Pioneer ACO officials consider periodically whether to continue, based on a number of criteria, including how well the program achieves financial and quality objectives and its working relationship with the CMS, he said.
Pioneers learn from each other as well, and fewer participants would be “unfortunate,” said Lockman, adding however that “I don't think it's a very significant impediment.”
The joint effort between five-hospital ThedaCare, in Appleton, Wis., and Bellin Health Systems in Green Bay, Wis., also will stay in the program. Dr. Dave Krueger, executive director for the Bellin-ThedaCare Healthcare Partners Pioneer ACO and its medical director, lamented the departures. “We are losing some intellectual horsepower,” he said.
The Wisconsin Pioneer benefited during the program's first year from prior investments in quality and efficiency improvement, he said. The ACO performed well during the first year and was also able to make new investments that officials hope will pay off in later years. “We're still ramping up,” he said. “We're still putting our changes in place.”
Without such advance investments, other Pioneers may have struggled to deliver results during the first 12 months, he said. Even so, Bellin and ThedaCare found the return on investment took longer than imagined. “It's always more work than we expect and never as quick as we expect either,” he said.