Editor’s note: See additional analysis of the first year of Pioneer ACO results from Douglas Hastings.
The Wall Street Journal called the results “mixed.” “Only a third reduced costs,” proclaimed Modern Healthcare. “HHS touts cost savings,” stated The Hill. Judging from the headlines, you’d think three very different Pioneer Accountable Care Organization results were issued this week.
Despite the media’s rush to proclaim winners, losers and future prospects for the program, the realities of the Pioneer program do not fall into bright line distinctions. Instead, results are much more nuanced, filled with bright spots and even more opportunities for learning and improvement.
CMS reported that costs for the more than 669,000 beneficiaries cared for by Pioneer ACOs grew by only 0.3 percent in 2012, compared to 0.8 percent for a similar patient population. This generated $87.6 million in gross savings for 2012, $33 million of which went to the Medicare Trust Funds. Taken with the quality and satisfaction measures, which all 32 ACOs moved in the right direction, early results are clearly tremendously promising, and indicate that if the entire country implemented ACOs, the savings could be in the billions.
But even in the face of good news, media attention instead focused on the fact that only a third of participants drove the cost reductions. Rather than declare the program flawed, we should view this outcome as a learning opportunity.
Blazing an evidence trail for others to follow. Pioneer is a very new program, and these are the first results anyone has seen measuring impact. In many cases, Pioneers had to take a “leap of faith,” participating in a new program where there was almost no data to support the theory of change. Now, however, we know that at least 13 of these organizations have figured out the “secret ingredient” to simultaneous cost and quality improvement, building a body of evidence to show others what works.
In essence, these organizations have proved that the promise of the ACO — lower cost, better health and better quality — is achievable, under the right conditions. And by learning from their experiences, we can begin to pinpoint the critical factors that need to be in place in order to achieve success. That alone is tremendous progress on the first leg of this journey.
Similarly, naysayers have chosen to focus on the Pioneers leaving the program, declaring it evidence of the program’s weaknesses. Again, reality is more complicated.
Providers have made tremendous investments in getting their ACOs off the ground. They will want, and will need, to continue to leverage these investments, most likely in settings that offer more favorable terms that are amenable to their operations and local patient populations. In our view, leaving the Pioneer program and moving into other flavors of ACO payment is more about an individual organization’s appetite for risk and the speed of change than it is a statement about the program.
Let’s not forget that the Pioneer program is incredibly ambitious, even for the most advanced health systems. In the first year of the program, Pioneers were eligible for bonuses for reporting quality measures, regardless of their performance. Now in year 2, Pioneers are subject to downside risk and losses that accrue for failure to achieve cost and quality targets, in addition to a higher bar to receive any shared shavings.
This level of risk is too high and too fast for many. Our research found that very few providers are prepared and able to take on capitated risk for their populations, which is the requirement for Pioneers in year 3. In fact, of all the lives covered in an ACO, a mere 2 percent are in a capitated model in the U.S.
Of those leaving, most are staying on with a Medicare ACO model, moving from Pioneer to the less risky options in the Medicare Shared Savings Program (MSSP). CMS itself has said that it expected “churn” between the Pioneer and MSSP programs, so the movement is not surprising. Particularly in the early years of accountable care, MSSP may be a more attractive option because it offers an upside-only track. This allows providers to test care delivery models and implement the needed infrastructure without the fear of financial losses, while also offering the opportunity to earn enough in shared savings to offset expenditures. According to CMS, the number of MSSP participants (now at 220) is rapidly gaining ground, with a large number of organizations filing Notices of Intent this summer for implementation in January 2014.
Improving the Pioneer program. That said, innovation in care delivery is a two-way street that requires not just assumption of risk on the part of providers, but also flexibility from CMS and other payers to create an environment that fosters creativity and rapid adaptation. There is a clear need to revisit some elements of the program so that additional providers will find the program attractive in the future. This includes changes to the quality benchmarks, fixes to ensure more timely access to accurate claims and financial data from CMS, and flexibility to allow providers the ability to steer beneficiaries to high-quality, low cost sites of care and prevent turnover.
Many factors influence success in the Pioneer program: an organization’s appetite for risk, program structure, and other issues that are isolated to particular local markets. Despite the headlines about the fateful nine exiting, 23 organizations plan to stay in the Pioneer program and 7 of the 9 have committed to join the MSSP. We continue to believe that the movement toward more patient-centered, coordinated, accountable care is our “north star.” Even within fee for service, health reform is pushing providers to assume greater accountability for the Triple Aim goals of lower costs, improved quality, and better health outcomes. The health systems that rise to this challenge today will be the winners of tomorrow.