More Medicare Pioneer ACOs head for hills

Three more accountable care organizations have dropped out of the Medicare Pioneer demonstration, suggesting that even more sophisticated health systems may be unwilling to take losses as part of testing new payment and delivery models in Medicare.

The CMS confirmed last week that Franciscan Alliance in Indianapolis, Genesys PHO in Flint, Mich., and Renaissance Health Network in Wayne, Pa., were exiting the program, now in its third year. The departures leave the program with 19 participants, down from 32 originally.

Genesys PHO will repay Medicare $1.9 million because the ACO failed to hold down spending during the second year, CEO Michael James said. The Pioneer model failed to adequately adjust for the severity of patients' poor health, he said.

The formula also discounts the role that socio-economic factors in a low-income community play in health, he added. His organization will apply to participate in the Medicare Shared Savings ACO program.

Jennifer Westfall, regional vice president for the Franciscan Alliance Accountable Care Organization, said her ACO did not get to share any savings in the Pioneer program's second year and anticipates no bonus in the third year, which prompted the organization to leave. It also plans to join the Shared Savings Program.

Renaissance Health Network did not respond to a request for comment.

Eleven Pioneer ACOs earned bonuses in the program's second year, with savings that ranged from $1.2 million to $13 million. Six generated losses and will be required to repay Medicare.

The mean score on measures of quality increased to 84% from 73% among the 23 ACOs in year two.

Some executives have criticized Medicare's formulas for rewarding ACOs as skewed in favor of entities operating in markets that have above-average health spending, where hospitals and doctors have easier opportunities for savings.

The CMS recently announced that its Medicare ACO demonstrations overall saved Medicare $817 million through 2013. Dozens of participants shared $445 million of that amount, but three-quarters of ACOs did not receive bonuses after failing to meet cost targets.

In an article published Sept. 17 in JAMA, Dr. Patrick Conway, director of the CMS Innovation Center, and other CMS officials said that the loss of Pioneer participants has raised concerns for them but that the program is yielding valuable lessons for ACO development.

Follow Melanie Evans on Twitter: @MHmevans