National pharmacy chain Walgreen Co. has exited two Medicare accountable care organizations, the second publicly traded company this year to scale back its investment in the closely watched Obamacare initiative that seeks to curb U.S. healthcare spending.
Walgreen's decision follows a similar move by Universal American, the publicly traded Medicare Advantage company, which has aggressively contracted with physicians to become the largest single operator of Medicare accountable care organizations. The company exited three ACOs this year, citing poor financial returns and physician engagement.
Walgreen launched three ACOs in 2013 but has now exited the Advocare Walgreens Well Network, which was formed with New Jersey physicians, and the Scott & White Healthcare Walgreens Well Network in Texas. The exit was first reported by Atlantic Information Services' ACO Business News.
The company continues to operate one Medicare ACO, the Diagnostic Clinic Walgreens Well Network in Deerfield, Ill.
Jim Cohn, spokesman for Walgreen, said in an email that the pharmacy giant and the ACOs jointly agreed that Walgreen would exit their agreements.
Walgreen executives were not available for an interview, he said. “As we've refined our collaborative model to best position our business to provide optimum value to patients, providers and payers, we made the mutual decision with our partners to exit these two ACOs,” he wrote.
The Advocare ACO included more than 13,400 Medicare patients in 2013 and failed to hold down spending that year, the only year for which data is publicly available. The ACO model agrees to hold healthcare spending below targets and meet quality performance benchmarks. In return, ACOs may keep some of the money they save. Advocare spending exceeded its benchmark by $6 million. Advocare spokeswoman Elana Krutoff said the organization had no comment.
The Scott and White ACO network included roughly 34,150 Medicare patients and largely held spending in line with its target.
Cohn said Walgreen found the Medicare accountable care program “less conducive" to efforts that include medication therapy management and analysis because “providers feel restricted to only provide services where Medicare will directly reimburse.” Accountable care under Medicare's Shared Savings Program continues to pay providers for each service they provide, but rewards those that can hold down spending.
Cohn declined to say whether Walgreen will renew its ACO contract with its remaining Diagnostic Clinic Walgreens Well Network after it expires at the end of next year. That Illinois ACO included more than 7,600 Medicare patients and saved Medicare roughly $1.6 million in 2013.
CMS officials have proposed new rules for more than 200 ACOs that will be up for renewal starting in January 2016, in an effort to persuade them to remain in the Medicare Shared Savings Program. The program, which was created under the Patient Protection and Affordable Care Act, is one the CMS has sought to aggressively expand and will include roughly 400 ACOs as of next year.
Follow Melanie Evans on Twitter: @MHmevans
