Federal officials are floating the idea of expanding Medicare's
Pioneer model for accountable care organizations
, but they might struggle to recruit any new participants.
Some prominent ACO leaders shared their skepticism in letters to the CMS that the agency released this month. The program, designed and administered by the CMS Innovation Center, is the government's earliest and most aggressive test under the Patient Protection and Affordable Care Act of new financial incentives for hospitals and doctors to hold down medical costs and meet quality targets.
The Pioneer initiative's rules put doctors and hospitals at too much risk of losing money with too little control, officials with Universal American, CHE Trinity Health, St. Vincent's Health Partners, the Franciscan Alliance and others said in the comment letters to federal officials
Pioneers must agree to accept potential losses with the promise of bonuses after the first year. ACOs participating in the Medicare shared-savings program, in contrast, can go three years without the risk of owing Medicare money if they fall short.
“Organizations are not gravitating toward the Pioneer ACO model because the downside risk is not outweighed by the opportunity for economic gain—the business case is not compelling,” wrote officials with CHE Trinity Health, a Michigan-based system. The system's CEO is Dr. Richard Gilfillan, who oversaw the launch of Pioneer ACOs as the Innovation Center's director before his departure last June.
Financial rewards are unpredictable thanks to performance targets that are sensitive to demographic changes, CHE Trinity told the CMS. And patients for whom Pioneers must manage costs and quality have no incentive to stay within the ACO's network rather than go elsewhere for care—and they frequently do, several organizations wrote.
Since the launch of the Pioneer model nearly three years ago, 10 of the 32 original participants—selected because they were deemed the best-equipped—have dropped out, saying the risk was too great. The latest was San Diego-based Sharp HealthCare, which disclosed in its financial results that it had withdrawn
. The “model was financially detrimental,” the system said.
Some ACOs that left the Pioneer program joined Medicare's less risky accountable care alternative, though that too has seen some participants exit. The departures and doubt that Medicare can recruit new hospitals and doctors to join the Pioneers suggest that early experience in Medicare accountable care has proven more problematic and risky than anticipated. The program got a rocky start as ACOs waited on patient data that could be analyzed to target quality and cost-control efforts. Other difficulties emerged as ACOs gained experience.
Pioneer ACOs need greater certainty in performance targets and must be able to identify early on the patients for which the ACO must manage costs and care, said Kevin Sears, vice president of payer and product innovation for CHE Trinity. CHE Trinity Health operates five Medicare ACOs, but none are Pioneers because the system withdrew from the program.
Financial rewards should be larger and targets to achieve those incentives should be clear and fixed from the start, unlike those under existing formulas, which are “volatile” because they're too sensitive to changes in death rates, the system's letter said.
Patients, meanwhile, should be allowed to select an ACO, CHE Trinity suggested. As it stands, patients are assigned to an ACO under criteria based on how much care they receive from doctors in the organization. The system also said Pioneer ACOs should have authority to reduce copays for certain services or providers.
“The absence of the ability to use benefit design or network design elements to help achieve better clinical and financial results, we believe is a hindrance to the success of the Pioneer program,” Sears said.
Allowing patients to voluntarily enroll would encourage ACOs to do more to compete for patients' loyalty on quality, said Universal American, the publicly traded health plan that operates 31 Medicare ACOs, more than any other participant. Universal American withdrew from three of its Medicare ACOs
after struggling earlier this year.
Medicare should also identify patients included in ACOs early on, not after organizations are being assessed on performance, several organizations said in their comment letters.
Not everyone predicted Medicare would have a hard time signing up new Pioneers.
Newton, Mass.-based Atrius Health and Phoenix-based Banner Health (which both have Pioneer ACOs) and Oakland, Calf.-based Kaiser Permanente (which does not) all said other organizations may be ready and eager to enter the program. Health systems “have matured and are more willing to accept the risk,” Banner said in its letter.
Kaiser Permanente officials noted that organizations with limited experience have been discouraged by the Pioneer program's performance standards and savings targets, which the system called “overly ambitious.” Kaiser suggested changes that would give Pioneer ACOs more time to improve care and award larger bonuses to those that perform the best. Follow Melanie Evans on Twitter: @MHmevans