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: Additional references for this article may be found at and

© 2015 Houghton Vandenack Williams

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CMS Releases Revised Regulations for Accountable Care Organizations Participating in the Medicare Shared Savings Program

By Matthew J. Effken.  The Centers for Medicare and Medicaid Services has released newly revised federal regulations designed to encourage greater participation in the Medicare Shared Savings Program (MSSP) by Accountable Care Organizations. Under MSSP, healthcare providers that participate in an ACO receive traditional Medicare fee-for-service payments, but also may be eligible to receive shared savings payments by meeting specified quality and cost-savings benchmarks.

The revised regulations sweeten the financial incentives available to ACOs by providing an additional 3‑year period before so-called Track 1 MSSP participants may incur financial penalties for failing to meet program benchmarks. Organizations participating in the higher risk Track 2 program, where ACOs share in both savings and losses, will see the potential for greater incentive payments for meeting targets.

A third track is also being added, which will provide the potential for even higher incentive payments to participating ACOs based on a savings sharing rate of up to 75 percent, in exchange for accepting more downside risk. CMS is also considering revisions to the process of setting program benchmarks and assigning Medicare beneficiaries to ACOs, in response to comments received from participating organizations. CMS will seek comments on a revised benchmarking methodology later this summer.

CMS says there are already over 7 million Medicare beneficiaries served by the more than 400 Accountable Care Organizations that currently participate in MSSP. CMS estimates that the revisions to the MSSP program will result in an additional $240 million of net federal savings, primarily by increasing the number of ACOs willing to continue their participation in the program beyond the initial three year commitment. Shared savings payments to be made to participating ACOs are estimated to be approximately $1.13 billion from 2016 through 2018, which translates to a net private benefit to the ACOs of $278 million, after accounting for start-up costs and shared losses.

The CMS release and revised regulations are available at the following link:

© 2015 Houghton Vandenack Williams

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HHS Announces Formation of 106 New Accountable Care Organizations

The ACA introduced the Accountable Care Organization as a way to cut down on Medicare spending. This plan may be picking up steam. On January 10, HHS announced that 106 new providers would become ACOs. As a result, there are now more than 250 ACOs nationwide. The trend toward ACOs is starting to take hold in the Midwest as well. Several ACOs are now active in Nebraska and nearby states. This latest group of ACOs includes two more serving Nebraska and Iowa. The next round of ACO enrollments is likely to bring more Nebraskan ACOs.

The ACO rules provide for regular Medicare payments like those offered to other providers. ACOs can also receive extra payments if their performance meets special quality standards. However, they face the risk of having to pay additional money to HHS if they fail to meet those standards. Thus, providers should analyze whether to apply for the program with an advisor.

© 2013 Parsonage Vandenack Williams LLC

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The Impact of the Supreme Court’s Healthcare Ruling on Physicians

The Supreme Court’s ruling recently upholding the constitutionality of the PPACA signals the continuing expansion of the U.S. healthcare system.

The PPACA extends care to approximately 50 million formerly uninsured individuals.  The uninsured currently forgo many, if not all, of the preventative procedures available.  This will surely change as the PPACA is implemented. Although all physicians will likely see an increase in patients, the majority of the demand will be borne by primary care providers (PCPs), likely without the assistance of an increase in physicians providing primary care services.

To meet the increase in demand, physicians should start looking for investments that will increase efficiency.  As time passes, healthcare reform initiatives like EHR, ACOs, and new physician reimbursement models may become more important for physicians trying to keep up with growing demand.  Individuals providing complementary services–nurse practitioners and physicians’ assistants–are also likely to play an increasingly more significant role going forward as providers look to cut costs.

The Department of Health and Human Services (HHS) recognizes the challenges physicians face as implementation of the PPACA progresses. Signaling primary care as a central focus of the legislation, HHS recently proposed increasing Medicaid reimbursements to Medicare levels for PCPs during 2013 and 2014.  The proposal is expected to boost reimbursements by an average of 34%, incentivizing PCPs to begin preparing for the influx of new patients.  The PPACA also seeks to facilitate the expansion of services into underserved areas by increasing payments to rural healthcare providers.

Although some uncertainty still exists, one thing is certain–physicians need to start taking proactive steps to address the significant expansion of demand for their services.

© 2012 Parsonage Vandenack Williams LLC

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New Rules Increase Incentives to Join an ACO

Physicians can now participate in an accountable care organization (“ACO”) without facing financial penalties for failing to achieve savings targets.  This new rule is among several released by CMS designed to increase the incentives for hospitals and physicians to join an ACO.  Other new rules include lowering the requirement of participants in an ACO to use electronic health records and a reduction in the number of quality measures.

While ACOs are designed to reward health care providers for providing quality care at cost-efficient rates, many providers were reluctant to embrace the system because of worries about the risks of penalties.  CMS hopes these new incentives will reduce such fears and encourage physicians and other health care providers to pursue ACO participation.

© 2012 Parsonage Vandenack Williams LLC

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HHS Names 32 ACO “Pioneers”

The Department of Health and Human Services recently announced the names of 32 health care physician groups and systems that it anticipates will be leaders in the formation of accountable care organizations (“ACOs”). The “pioneers” are considered frontrunners in working toward achieving the ACO model’s goals of providing higher quality care and reducing health care costs.

The 32 providers named come from 18 states; urban, rural and suburban settings; and a mix of high-cost and low-cost areas.

The 32 organizations participating in the Pioneer ACO Model are as follows:

Organization Service Area
1. Allina Hospitals & Clinics Minnesota and Western Wisconsin
2. Atrius Health Eastern and Central Massachusetts
3. Banner Health Network Phoenix, Arizona Metropolitan Area (Maricopa and Pinal Counties)
4. Bellin-Thedacare Healthcare Partners Northeast Wisconsin
5. Beth Israel Deaconess Physician Organization Eastern Massachusetts
6. Bronx Accountable Healthcare Network (BAHN) New York City (the Bronx) and lower Westchester County, NY
7. Brown & Toland Physicians San Francisco Bay Area, CA
8. Dartmouth-Hitchcock ACO New Hampshire and Eastern Vermont
9. Eastern Maine Healthcare System Central, Eastern, and Northern Maine
10. Fairview Health Systems Minneapolis, MN Metropolitan Area
11. Franciscan Alliance Indianapolis and Central Indiana
12. Genesys PHO Southeastern Michigan
13. Healthcare Partners Medical Group Los Angeles and Orange Counties, CA
14. Healthcare Partners of Nevada Clark and Nye Counties, NV
15. Heritage California ACO Southern, Central, and Costal California
16. JSA Medical Group, a division of HealthCare Partners Orlando, Tampa Bay, and surrounding South Florida
17. Michigan Pioneer ACO Southeastern Michigan
18. Monarch Healthcare Orange County, CA
19. Mount Auburn Cambridge Independent Practice Association (MACIPA) Eastern Massachusetts
20. North Texas ACO Tarrant, Johnson and Parker counties in North Texas
21. OSF Healthcare System Central Illinois
22. Park Nicollet Health Services Minneapolis, MN Metropolitan Area
23. Partners Healthcare Eastern Massachusetts
24. Physician Health Partners Denver, CO Metropolitan Area
25. Presbyterian Healthcare Services – Central New Mexico Pioneer Accountable Care Organization Central New Mexico
26. Primecare Medical Network Southern California (San Bernardino and Riverside Counties)
27. Renaissance Medical Management Company Southeastern Pennsylvania
28. Seton Health Alliance Central Texas (11 county area including Austin)
29. Sharp Healthcare System San Diego County
30. Steward Health Care System Eastern Massachusetts
31. TriHealth, Inc. Northwest Central Iowa
32. University of Michigan Southeastern Michigan

© 2012 Parsonage Vandenack Williams LLC

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