The closely watched Medicare Pioneer accountable care program finished its first year with modest cost savings while losing nearly one-third of its participants, underscoring the challenges that policymakers and healthcare providers face as they reform payment and delivery systems to reduce healthcare spending and improve quality of care.
The CMS last week released results for its Pioneer ACOs, a select group of 32 organizations that agreed to new financial incentives tied to quality reporting and meeting cost targets. Many made their numbers. Eighteen Pioneers held spending somewhat in check, including 13 that achieved enough savings to earn bonuses totaling $76 million. That resulted from $140 million in total Medicare savings, before some adjustments.
Costs for the nearly 670,000 Medicare beneficiaries served by Pioneer ACOs grew by just 0.3% in 2012, compared with 0.8% for a comparable patient population. After the shared savings are paid out to the ACOs, the Pioneers will have produced an estimated net savings to Medicare of $33 million for 2012.
Of course, that's a tiny fraction of Medicare's $536 billion in spending last year. But no one thought that overhauling the country's fragmented delivery system would be quick or easy. And the Pioneer savings are considered significant as an early indicator of the potential for revamping the payment system to hold providers responsible for managing population health in Medicare and beyond.
The goal of the Pioneer and other Medicare ACO programs is to more tightly integrate providers in the fragmented U.S. healthcare system and establish joint financial incentives for them to provide better, more seamless care and improve the overall health of their patient populations. But no one is sure that ACOs can deliver major cost savings, especially right away.
The savings achieved by more than half the Pioneers were “encouraging,” said Dr. Bruce Landon, a Harvard Medical School health policy professor who studies financial incentives in healthcare. “It doesn't happen overnight.”