In the first year of Medicare’s most aggressive test of the accountable care organization model, less than half of participating organizations cut costs enough to share the savings with the government, though all slowed overall costs and improved quality across the-board.
Of the 32 Pioneer ACOs, 13 generated enough savings in 2012 to share in the earnings with the Medicare program, though only two generated shared losses, according to first-year results released by Medicare July 16.
Overall, the successful ACOs took home about $76 million in shared savings, while Medicare earned nearly $33 million from shared savings and about $4 million from shared losses.
The Pioneers were also successful in lowering the overall cost growth for the 669,000 Medicare beneficiaries associated with their ACOs. Costs for those beneficiaries grew by 0.3% in 2012 compared with 0.8% for similar beneficiaries during the same time period.
Mr. Blair Childs
"If you want evidence of bending the cost curve, that’s a clear win," said Rob Lazerow, practice manager at The Advisory Board Company, a consulting firm specializing in health care.
The Pioneer ACO model, launched January 2012 under the Affordable Care Act, is a 3-year program that incentivizes health care systems to improve care and coordination to save money. Successful systems share in the savings; unsuccessful ones share in the losses.
To share in the savings, the Pioneer ACOs must meet quality standards and generate a minimum savings rate between 1% and 2.7% to account for normal variation in Medicare spending. The shared savings are determined by comparing the ACO’s performance to a benchmark, which is based on Medicare’s past spending for the group of patients associated with the ACO.
During the third year of the program, Pioneer ACOs that have achieved savings during the first 2 years can opt to move to a population-based payment model where they would receive a per-beneficiary per month payment to replace some or all of their Medicare fee-for-service payments.
In this first year, decreased hospital admissions and readmissions were partly responsible for the savings, according to officials at the Centers for Medicare and Medicaid Services. In terms of readmissions, 25 of the 32 Pioneer ACOs generated lower risk-adjusted readmission rates for their beneficiaries compared to the benchmark rate for all Medicare fee-for-service beneficiaries.
The Pioneer ACOs also outperformed other managed care populations on hypertension and cholesterol control. The median rate for hypertension control for diabetic beneficiaries was 68% at Pioneer ACOs, compared to 55% in adult diabetic patients in 10 managed care plans across seven states from 2000 to 2001. Similarly, the median rate for low density lipoprotein (LDL) control among diabetic beneficiaries was 57% in the Pioneer ACOs, compared to 48% among adult diabetic patients among the managed care plans from 2000 to 2001.
Overall, the Pioneer ACOs exceeded the published performance of fee-for-service Medicare for 15 clinical quality measures in which there were data to make comparisons. Another seven measures didn’t have comparable data in the published literature, according to the CMS.
The results are encouraging, especially for a new program, said Blair Childs, senior vice president of public affairs for the Premier health care alliance.
"The fact that these improvements were achieved, so quickly, is a real testament to the participating health systems, all of whom stepped up to assume significant risk and make major investments in ACO infrastructure, health information technology, governance, and care delivery models," Mr. Childs said. "In many cases, participating Pioneers had to take a ‘leap of faith,’ and the fact that so many goals were reached is helpful in terms of building the evidence base to support this new model of care as an effective way to improve quality and reduce costs."
The CMS also announced that nine of the ACOs will be leaving the Pioneer program. Of those, two are leaving the program completely while seven have notified the CMS that they intend to apply to the Medicare Shared Savings Program, a different ACO model with less aggressive risk sharing.
The University of Michigan is one of the seven organizations that will be moving out of the Pioneer ACO model and into the Medicare Shared Savings Program. Officials at the university said they are seeking to move to a program that will have simpler administrative requirements but will allow them to continue participation in the ACO environment.
"We remain firmly committed to the concept of improving health care and containing cost growth via the population health model that drives all ACOs," Dr. David Spahlinger, executive director of the University of Michigan Medical School’s Faculty Group Practice, said in a statement.