No delay in tying Pioneer ACO pay for quality performance

Medicare will tie financial incentives to quality performance this year for 32 accountable care organizations known as Pioneers, the CMS' first and most ambitious pilot of the new payment model.

In a letter to Pioneers on Tuesday (PDF), the CMS rejected the ACOs' call to award financial incentives based on whether organizations reported quality scores and postpone until 2014 payment tied to performance benchmarks.

The CMS also moved to replace “flat percentage” quality performance benchmarks that several Pioneers challenged in February with empirically based benchmarks, a CMS spokesman said.

Hospitals and doctors are eligible for bonus payments under accountable care if providers can meet quality targets and reduce the cost of care. Launched in January 2012, Medicare's Pioneer accountable care organizations agreed to accept potentially larger bonus payments, but also agreed to accept potential losses.

New quality benchmarks based on recently received data will be proposed soon, according to the CMS letter. The agency intends to use Medicare fee-for-service and Medicare Advantage data to establish new benchmarks. The data was not previously available, so flat percentage benchmarks were proposed, the CMS letter said.

The benchmarks will be applied to Pioneers this year and to another 220 ACOs in the Medicare Shared Savings Program in 2014.

Dr. Stuart Rosenberg, co-chairman of the Beth Israel Deaconess Pioneer accountable care organization, praised the use of Medicare data instead of a flat percentage as a source of quality benchmarks. “The assurance is that it's based on actual results, not an arbitrary number, so you can't argue with the actual results.”

Rosenberg, who is also president and CEO of the Harvard Medical Faculty Physicians, said Pioneers believe their organizations should be held to the highest performance standards, but those standards should be based on data. He praised Marilyn Tavenner, acting administrator for CMS, and Dr. Richard Gilfillan, director of the Centers for Medicare and Medicaid Innovation, for their personal involvement.

“What's clear is that CMS is saying we heard you loud and clear and we don't think these flat percentages are good, this is not the way to measure your performance accurately,” said Dr. Kavita Patel, a fellow in economic studies at the Brookings Institution.

But it does raise an important question, she said: What will proposed benchmarks look like?

“If you're running a Pioneer, you need to know,” she said.

In a statement, the CMS described the Pioneers as “at the leading edge” and officials acknowledged Pioneers' concerns with quality data used for benchmarks. “We are not going to delay holding ACOs accountable for these quality measures, but we will speed up the collection and application of data to these important quality metrics to ensure that they are as accurate as possible.”

Kristen Sloan, a vice president at the National Partnership for Women & Families, praised the CMS decision to go ahead with pay-for-performance for Pioneers. “If we're moving to a value-based system, then we need to pay based on performance and the way you do that is to measure that performance,” she said. “Those two things go hand in hand.”

In February, Pioneers said in a letter to the CMS that 19 proposed “flat percentage” quality benchmarks were higher than other quality performance targets. Pioneers urged the Centers for Medicare and Medicaid Innovation to analyze ACO data for “best in class performance” to help “set and scale percentages accordingly.” Pioneers called for a response “so that we can make informed decisions regarding our ongoing participation.”

Rosenberg declined to comment on his organization's plans for participation.

Atrius Health, Sharp Healthcare System and Eastern Maine Health System, which are among the Pioneer ACOs, declined to comment on the CMS letter.

Follow Melanie Evans on Twitter: @MHmevans