GE Healthcare Camden Group Insights Blog

Sixty-Four ACOs Save Enough Money To Earn Bonuses

Posted by Matthew Smith on Sep 30, 2014 12:32:00 PM
Courtesy of Kaiser Health News

ACO, Accountable Care OrganizationAbout a quarter of the 243 groups of hospitals and doctors that banded together as accountable care organizations under the Affordable Care Act saved Medicare enough money to earn bonuses, according to the Centers for Medicare & Medicaid Services announced.

Those 64 ACOs earned a combined $445 million in bonuses, the agency said. Medicare saved $372 million after accounting for the ACOs that did not show success, including four that overspent significantly and now owe the government money.

The bonuses, losses and Medicare savings are teensy sums in the context of a program that spends half a trillion dollars a year on care for the elderly and disabled. But the Obama administration views the results so far as evidence that reorganizing the financial incentives for doctors and hospitals — a key element of the health law – can translate to substantial savings if the program expands nationwide.

ACOS are voluntary affiliations in which doctors and hospitals join together to coordinate care with the lure of earning extra money if they save Medicare money while maintaining the health of their patients. The program aims to encourage doctors to focus on keeping patients healthy and to intervene quickly if they are struggling, rather than waiting until they need complex — and for doctors in the old pay model, lucrative — operations or other kinds of care.

There are now more than 360 Medicare ACOs caring for about 5.6 million elderly Americans, although some of these ACOs are new enough that Medicare is not assessing their performance.

There are two types of ACO programs for which Medicare reported results. Under the largest experiment, the Medicare Shared Savings Program, 53 ACOs saved enough money for Medicare in 2013 to earn a piece of that as a bonus. On the red side of the ledger, 41 ACOs spent more than Medicare estimated they would under normal conditions. Most of these ACOs are shielded from financial penalties, but one –Dean Clinic and St. Mary’s Hospital Accountable Care Organization in Wisconsin –will have to repay Medicare $4 million because it cost Medicare $10 million above expectations.

A list of bonuses for those ACOs is available here.

For the remainder of these ACOs, Medicare either did not have final results or found spending changes so small that they might be due to fluctuations in patients’ year-to-year needs. Those ACOs received neither bonuses nor penalties.

The second, smaller group of 23 ACOs are in the Pioneer ACO Model. They have more experience, and the financial incentives are larger. Out of this group, 11 earned bonuses, Medicare announced. Three other ACOs in this Pioneer ACO Model lost money, and three more took advantage of a Medicare option that allows them to delay evaluation until after they have three years of experience.

The Pioneer results covered the second year of that program, while the performances of the other ACOs were judged for a period between 12 and 21 months, depending on when the ACO launched. Medicare announced interim results in January.

Topics: ACO, Accountable Care Organization, CMS, Pioneer Accountable Care Organization

Four More Hospital Systems Exit Pioneer ACO Program

Posted by Matthew Smith on Sep 26, 2014 2:27:00 PM

Pioneer ACO, Accountable Care OrganizationThree years after the Centers For Medicare & Medicaid Services selected 32 groups to participate in the Pioneer Accountable Care Organization Model program, they are down to 19 players. Officials say that navigating the program's rules has proved challenging. The Franciscan Alliance, Genesys PHO and Renaissance Health Network have exited the program, which is now in its third year. In August, Sharp HealthCare, San Diego, announced its decision to pull out after determining “the model was financially detrimental” despite the ACO's performance managing quality and healthcare use.

Franciscan Alliance plans to join the Medicare Shared Savings Program, said Jennifer Westfall, Franciscan's regional vice president for Franciscan Alliance Accountable Care Organization. The ACO did not get to share any savings in the Pioneer program's second year and anticipates no bonus in the third year, which prompted the organization to leave. 

“Results from 2013, our second performance year (PY2) in the Pioneer ACO, are now available from CMS,” she said. “Overall, our Pioneer ACO received a quality score rating of 83.7%. While this is indicative of strong performance, we did not do as well in meeting our benchmark for reducing the costs of patient care.”

Michael James, president and chief executive of Genesys PHO, said the Pioneer's financial formula put the Michigan ACO at a disadvantage. The ACO faced a $2.5 million penalty in the first year and $1.9 million in the second year. Genesys PHO will also apply to the shared savings program, he said. 

Following are capsules from two other articles published this week by The Wall Street Journal and Modern Healthcare, respectively.

The Wall Street Journal: A Medicare Program Loses More Health-Care Providers
Four more hospital systems recently have dropped out of the Pioneer Accountable Care Organization program, a key part of the federal health law, leaving just 19 of the original 32 participants. Accountable care organizations seek to curb costs by better coordinating care. Hospitals and groups of doctors who keep costs down for large groups of Medicare patients get to share in those savings. But navigating the program's rules has proved challenging for some hospitals, even those long experienced in coordinated care (Beck, 9/25).

Modern Healthcare: Medicare’s Pioneer Program Down To 19 ACOs After Three More Exit
Three years after CMS carefully selected 32 accountable care organizations deemed best able to manage the Pioneer program's financial risks, three more decided they no longer want to. The new departures -- the program is now down to 19 ACOs -- suggest even the most sophisticated health systems may be unwilling to take losses as policymakers test new payment and delivery models. Franciscan Alliance in Indianapolis, Genesys PHO in Flint, Mich., and Renaissance Health Network in Wayne, Pa., have exited the program, which is now in its third year (Evans, 9/25).

Topics: ACO, Accountable Care Organization, Pioneer Accountable Care Organization

Subscribe to Email Updates

Value Model, Health Analytics

Recent Posts

Posts by Topic

Follow Me