Last week, The Journal of the American Medical Association (JAMA) published the results of a study that showed that the Pioneer Accountable Care Organization (ACO) Model achieved almost $400 million less spending for patient care than fee-for-service (FFS) Medicare patients over two years. These cost savings were attained without deterioration in the quality of care.
An ACO is a group of physicians, hospitals, and other providers who combine to provide care for Medicare patients. The goals of ACOs include high quality care while spending less. ACO participants who are successful in achieving those goals while meeting quality measures stand to share in the savings with Medicare. The Pioneer ACO Model is one of three ACO programs offered by Medicare, the other two being the Medicare Shared Savings Program and the Advance Payment ACO Model. The Medicare Shared Savings Program helps Medicare fee-for-service program providers become ACOs and rewards them for lowering health care cost increases and meeting performance standards. Participants in the Shared Savings Program may then become selected to participate in the Advance Payment ACO Model, where they receive advance payments on their expected shared savings, which can be used to improve their care coordination infrastructure. The Pioneer Model was designed for early adopters of coordinated care and is no longer accepting applications.
Over the first two years of the Pioneer ACO pilot program, participating ACOs have met with varying success. Of the 32 participants in Year 1, 19 remain. The other 13 have dropped out or switched to other models. Many participants complained that the rules were too complex and the standards were too strict. Of the 32 participants in Year 1, only 13 qualified to share savings with Medicare. That number decreased to 11 in Year 2, while two programs actually paid several million dollars in penalties. Nevertheless, those that did save were able to show an almost $400 million lower increase in spending compared to non-participants. The cost savings resulted primarily from lower inpatient spending and lower utilization of physician services.
The Pioneer ACO Model is the first alternative payment model to receive certification from the Centers for Medicare & Medicaid Services (CMS) that it has met the criteria for expansion to a larger group of Medicare beneficiaries. The Secretary of Health and Human Services, Sylvia Burwell, has a goal of 30% of all Medicare payments through such value-based models by 2016 and 50% by 2018.
As ACOs and coordinated care become more important, organizations will need help sharing their clinical data and using it to demonstrate quality. Interoperability will become increasingly crucial for providers in value-based models as they seek to allow access to patient data and to meet Medicare benchmarks.
Kasey Poon is a Physician Informaticist, Clinical Terminology, with 3M Health Information Systems.