Pioneer ACOs: Surging To A New Level Of Integration?
May 25th, 2011
 by
Douglas Hastings
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Editor’s Note: The post below discusses the recent announcement regarding accountable care organizations by the Center For Medicare and Medicaid Innovation. This is also the topic of another post, by Steve Lieberman, published today on Health Affairs Blog.
In a speech on February 1, among other comments, Dr. Don Berwick, the Administrator for the Centers for Medicare and Medicaid Services, had the following to say about accountable care organizations under the Medicare Shared Savings Program (“MSSP”) Proposed Rule, which was subsequently released on March 31:
The proposed rule will be a core model. It will be what anybody can play with. But we all know there are places out there that are ready to surge ahead to a completely different level of integration. They’ve been there already or are en route. Wouldn’t it be nice if we had made a space for a vanguard, who can move ahead of the pack and teach us all the way to go? Maybe the Innovation Center can be a home for that kind of pioneering element on our behalf, on everyone’s behalf. Not specially entitled players, but our scouts.
Within two weeks of the Proposed Rule’s issuance, one could hear the national ACO balloon deflating as a result of wholesale and widespread criticism of the Proposed Rule, including negative comments from many of the original champions of accountable care. Some of this negative reaction was the result of organizations new to the ACO concept not understanding the complexity and level of effort it will take to transform the delivery system into a more coordinated and accountable one. But much of it was due to legitimate criticism by knowledgeable policy and industry experts of elements of the Proposed Rule. CMS has strongly indicated that changes will be made to accommodate some of the concerns in the final rule, due late summer.
While we await the final rule, now comes the request for applications for organizations to participate in the Pioneer Accountable Care Organization Model (the “Pioneer ACO Model”), which was released by the Center for Medicare and Medicaid Innovation (“CMMI”) on May 17. This CMMI opportunity represents what Dr. Berwick was alluding to on February 1 when he referred to “a vanguard” and “our scouts.”
Most striking to me about the Pioneer ACO program is how fast the track is to participation — letters of intent due to CMS June 10, applications due July 18, program to begin in the Fall.
A New Risk Model. The Pioneer ACO Model’s principal new feature is a more advanced risk model leading to population-based payments. CMMI’s stated goal for the population-based payment methodology is to allow Pioneer ACOs the revenue flexibility to provide services not currently reimbursed under the Medicare Fee-For-Service payment methodology and to invest in the infrastructure to support care coordination. In addition, CMMI strongly encourages Pioneer ACO applicants to propose further alternative payment models, which CMMI will consider for possible inclusion in the program. Given the nearly-universal criticism of the Track 2 “two-sided risk” model set forth in the MSSP Proposed Rule, one wonders how much of that model, if any, will remain in the MSSP final rule, at least as a mandatory component, in light of the risk model work being done by CMMI.
The Advanced Payment Initiative. In addition to announcing the Pioneer ACO model, CMMI requested comments on an Advanced Payment Initiative, a proposal to test whether and how pre-paying a portion of future shared savings for investments in infrastructure and staff for care coordination would increase participation in the MSSP. Thus, with the Pioneer ACO Model and the Advanced Payment Initiative, CMMI has provided options, or at least is considering options, that might appeal to provider organizations both more advanced and less advanced than the target ACOs in the MSSP.
A key element of the debate over ACOs has been how broad a net of inclusion to cast in terms of the diverse levels of readiness for payment and delivery reform currently existing in the market place. One of many concerns regarding the MSSP Proposed Rule is that, in being prescriptive in so many ways, it creates a program out of reach for many interested parties, but also one that is unattractive to the more advanced integrated delivery organizations. We will see whether CMMI has created a program of interest for those more advanced organizations with the Pioneer ACO Model.
Comparing The Pioneer ACO And MSSP Models
Among other changes from the MSSP, the Pioneer ACO Model provides (1) as mentioned, a more advanced financial risk model, including transition to a population-based payment in the third year; (2) a requirement that participants have at least 50 percent of their total revenues derived from outcomes-based contracts by the end of the second year, thus making it mandatory to some degree that Pioneer ACOs receive such payments in Medicaid and/or commercial market contracts as well as Medicare; (3) the option of prospective patient attribution; (4) counting certain non-MD providers and specialists for attribution purposes; (5) a minimum of 15,000 assigned Medicare beneficiaries (5,000 in rural areas). Otherwise, the Pioneer Model operates in much the same fashion as the MSSP under the Proposed Rule. These clearly are coordinated programs within CMS, and it is not as if the CMMI program has significantly fewer requirements or complexity.
For example, the legal status, governance and regulatory requirements and guidance for the Pioneer Model and the MSSP are virtually identical. (Two slight changes are (1) the requirement that in the Pioneer ACO Model, the ACO board must include a “consumer advocate” and (2) that Federally Qualified Health Centers are among the organizations that can form Pioneer ACOs). CMMI indicates that it will apply rules consistent with the regulatory guidance issued by the Federal Trade Commission, Department of Justice, the HHS Office of Inspector General, and the IRS in connection with the MSSP. Thus, for antitrust purposes, CMMI states that it will work closely with the antitrust agencies in reviewing any ACO applicant that exceeds the threshold of 50 percent market share in its primary service area — developed in connection with the MSSP — and “will not approve for purposes of the Pioneer ACO Model any applicant that will present significant competitive problems.” So, from a timing perspective, a high market share ACO considering the Pioneer Model, but also interested in the MSSP as an alternative, would need to apply to CMMI and, possibly, simultaneously seek mandatory review from the antirust agencies for purposes of the MSSP in order to be in a position to file a timely application for the MSSP in the event that they are not approved for the Pioneer Model.
CMMI indicates that it is interested in 30 ACOs under the Pioneer ACO Model. Applicants will need to apply before knowing the substance of the MSSP final rule (although they are given the opportunity to withdraw their application once the final rule is out). An organization cannot, of course, be in both programs.
It will be very interesting in the September/October 2011 time period through the end of 2011 to see how many organizations apply for the Pioneer ACO model, how many are approved, and how many others seek to be admitted to the MSSP. There is a lot riding on how this plays out — both in terms of advancing the cause of accountable care and in terms of the perception that Medicare is, or is not, making a helpful contribution.
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