Half empty or half full? Medicare ACO program a tale of two takes

Is Medicare’s accountable-care organization (ACO) program a modest success to build on or a major disappointment in the making? That depends on whom you’ve been listening to, and when.

The third week of September, CMS issued a fact sheet on care quality and financial performance for the agency's Pioneer and Shared Savings ACOs showing that, in their second year, Pioneer ACOs achieved savings of more than $96 million, qualifying successful participants for a share of some $68 million in bonus payments.

Medicare ACOs “have successfully improved the quality of care for Medicare beneficiaries by fostering greater collaboration between doctors, hospitals, and health care providers and keeping patients healthy rather than treating them when they were sick,” CMS stated in an introduction to the numbers.

Then came the fourth week of September.

By the end of that week, according to multiple reports, three hospital systems had left or were about to leave the Pioneer program—Genesys PHO in Flint, Mich., Franciscan Alliance in central Indiana and Renaissance Health Network in Pennsylvania.

They follow in the departing footsteps of Sharp HealthCare in San Diego, which announced its withdrawal in August.

Nor was this the beginning of a trend. The original Pioneer headcount stood at 32; the past 15 months have seen something of an exodus, and now the remaining participants number just 19.

Sharp CEO Allison Fleury may have spoken for most if not all the leave-takers when she explained her organization’s rationale. In an interview with California Healthline, Fleury said the Pioneer program’s financial methodology was punitive to the point that the best Sharp could have expected was breaking even. Despite reducing readmissions and hitting other quality benchmarks, the provider system projected that it would probably not get a chance to share in the millions of dollars in new savings CMS held out for delivering better care.

Some of the factors that led Sharp to that conclusion are specific to California, but the bottom line Fleury cites is almost certainly common among the systems that have backed out since the Pioneer program started in 2012. “When we projected [the] issues for 2014, we thought we were at risk of having a shared loss, even though our performance was favorable,” Fleury said before adding: “We were getting harmed.”

Numerous sources reported that Genesys and Franciscan Alliance are applying to enter Medicare’s larger, non-punitive Medicare Shared Savings Program.

Meanwhile, ACOs untethered to the federal government continue to blossom around the country, embracing pay-for-performance and population health management models on their own terms. Health IT Analytics reported on several new ACO partnerships between large payers and provider organizations.

While the news of another cluster of Pioneers heading for the exits would seem to bode ill for the future of the program, some observers remain sanguine, noting that CMS has plans to introduce major modifications in January.

“Do I believe ACOs can work? Obviously, we pulled out,” Sharp’s Fleury said in the California Healthline interview. “But if the model is structured appropriately, it can work.”

To read the Medicare fact sheet, “Medicare ACOs continue to succeed in improving care, lowering cost growth,” click here.