Pioneer Accountable Care Organizations Report Mixed Results

By Matthew J. Effken. The federal government is touting a recently published study by L&M Policy Research that concludes the 32 “Pioneer” Accountable Care Organizations saved taxpayers $384 million in Medicare expenditures during the years 2012 and 2013. The savings average out to approximately $300 per participating beneficiary per year compared to other Medicare fee-for-service participants.

Accountable care organizations are made up of doctors, hospitals, and other healthcare providers that work together to provide coordinated care to Medicare fee-for-service beneficiaries. To the extent an ACO’s efforts reduce Medicare spending based on certain benchmarks, they split the savings with the government. Pioneer ACOs also agree to share losses, by refunding a portion of excess spending to Medicare.

Health and Human Services Secretary Sylvia Matthews Burwell highlighted the results in a recent speech to the American Hospital Association. The Secretary linked the ACO results to the agency’s goal to have 85 percent of Medicare fee-for-service payments to be tied to value by 2016 and 90 percent by 2018.

Not all indications in the report are positive, however. The amount of annual savings in the second year of the program was less than half of that in the first year, indicating that returns may diminish over time. Also, some Pioneer ACOs experienced losses and a significant portion merely broke even. In an alternative report, the Center for American Progress concluded that net federal savings were only 0.23 percent of the benchmark in year one and 0.67 of the benchmark in year two. Of the 32 original participants in Pioneer ACO model, only 19 currently remain in the program. However, some have opted to participate in other ACO programs, such as the Medicare Shared Savings Program, where the organizations are not subject to downside risk.

The L&M study is available at: http://innovation.cms.gov/Files/reports/PioneerACOEvalRpt2.pdf. Additional references for this article may be found at https://cdn.americanprogress.org/wp-content/uploads/2015/05/ACOs-report-final2.pdf and http://www.modernhealthcare.com/article/20150509/MAGAZINE/305099984

© 2015 Houghton Vandenack Williams

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