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Pioneer ACO Model Saves Millions

The Medicare Shared Savings Program provides incentives for Accountable Care Organizations (ACOs) that meet standards for quality performance and reduce cost while putting beneficiaries first. The Pioneer ACO Model has been in existence for some time and the Patient protection and Affordable Care Act (PPACA) added significantly to the Medicare fee-for-service (FFS) experiment by adding hundreds more entities to a new shared-savings program.

A little about ACOs. It is a pilot project designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. Doctors and hospitals who form ACOs can share in savings generated for Medicare if they work together to coordinate patient care, keep patients healthy and meet certain quality performance standards. Theoretically, by aligning payment incentives between the federal government and an ACO, and then downstreaming those incentives from the ACO entity to providers, costs can be saved and quality improved in the relatively open or wide traditional Medicare network.

The verdict is not yet in on the success of physician and hospital groups’ efforts to rein in costs and improve quality in the archaic traditional delivery system, but Department of Health and Human Services (HHS) and the Centers for Medicare and Medicaid Services (CMS) are touting the accomplishments in the earlier Pioneer program.

The HHS and CMS announced on May 4 that the Pioneer ACO Modelhave derived sufficient savings for Medicare to use the payment approach more widely in its ACO programs. According to an independent evaluation report, the Pioneer ACO Model was found to generate over $384 million in savings to Medicare over its first couple of years. The findings documented Medicare savings of $279.7 million in the first year (2012) and $104.5 million in the second year (2013).

From the evaluation report, Pioneer ACO beneficiaries appear to have slightly higher satisfaction with the timeliness of care, appointments and information compared to fee-for service (FFS) and Medicare Advantage beneficiaries. The Pioneer ACO beneficiaries seem to be very satisfied with overall provider communication. Beneficiaries of the model are using inpatient hospital services less and have fewer tests and procedures. They are also having more follow-up visits from their providers after hospital discharge. This model has demonstrated that patients can get high quality of coordinated care and still generate Medicare savings.

With Medicare now over a half a trillion dollars a year and traditional FFS still about two-thirds of enrollees, the numbers are small. In addition, the Pioneer ACOs represent some of the most experienced and sophisticated integrated health systems out there. The new PPACA shared-savings entities tend to be start-up entities with much less experience in the arena. But the data has convinced policy-makers that the initiative is worthy of further investment. This evaluation gives CMS greater confidence in scaling elements of the ACO model to benefit people across the nation. CMS is working on the best strategies for implementing these lessons learned from Pioneer ACO, which could spell good news for the types of incentives that the PPACA shared-savings program could see in the future.

Some predict, however, that as the ACO model matures, the program could in fact wither away, with the successful entities seeing much greater upside entering the Medicare Advantage market and the less-successful seeing the costs too high to substantiate the potential reward.

Marc Ryan

Marc S. Ryan serves as MedHOK’s Chief Strategy and Compliance Officer. During his career, Marc has served a number of health plans in executive-level regulatory, compliance, business development, and operations roles. He has launched and operated plans with Medicare, Medicaid, Commercial and Exchange lines of business. Marc was the Secretary of Policy and Management and State Budget Director of Connecticut, where he oversaw all aspects of state budgeting and management. In this role, Marc created the state’s Medicaid and SCHIP managed care programs and oversaw its state employee and retiree health plans. He also created the state’s long-term care continuum program. Marc was nominated by then HHS Secretary Tommy Thompson to serve on a panel of state program experts to advise CMS on aspects of Medicare Part D implementation. He also was nominated by Florida’s Medicaid Secretary to serve on the state’s Medicaid Reform advisory panel.

Marc graduated cum laude from the Edmund A. Walsh School of Foreign Service at Georgetown University with a Bachelor of Science in Foreign Service. He received a Master of Public Administration, specializing in local government management and managed healthcare, from the University of New Haven. He was inducted into Sigma Beta Delta, a national honor society for business, management, and administration.

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