Dartmouth-Hitchcock Medical Center is the latest to pull out of the CMS Innovation Center's Pioneer ACO initiative, Medicare's earliest and most aggressive test of accountable care, which has lost nearly half its initial cohort.
The Lebanon, N.H., medical center lost money during the Innovation Center's Pioneer ACO initiative, which requires participating hospitals and doctors to repay Medicare for failing to meet performance targets on quality and savings. The Dartmouth-Hitchcock ACO exit follows earlier departures that reduced the number of Pioneers to 19 from the original 32.
The exodus underscores the challenges that policymakers face as they wrangle with hospitals and doctors over how to change how Medicare pays for care. Federal officials announced this year that half of Medicare spending outside of managed care would be under new payment models by 2018. New models reward hospitals and doctors that meet targets for quality and savings, but may also penalize those that fail. The targets, however, sparked ongoing controversy as the industry and federal officials debate how they should be set.
Dartmouth-Hitchcock is at an unfair disadvantage under formulas that cost the ACO $3.6 million in the third year, CEO Dr. James Weinstein said.
The system already operated efficiently before entering the Pioneer ACO program, he said, and Pioneer savings targets reward improvement, meaning hospitals and doctors that are the least efficient can make the greatest gains. He compared Dartmouth-Hitchcock to a fast runner who is asked to constantly best his own time. “You're asking organizations that are already running really well to run a 2-minute mile,” he said. “It's not possible.”
The CMS Innovation Center could minimize potential penalties for the most efficient and limit the potential bonuses for the least efficient to create better incentives for everyone to improve, he said. He also complained that quality performance is not given the same weight as financial savings, so efficient providers who make quality gains are effectively penalized.
The Affordable Care Act created the Innovation Center to test new payments, including the Pioneer program, a small but aggressive accountable care effort launched in 2012.
New Hampshire-based Dartmouth-Hitchcock also has noted that patients included in its ACO are traveling to visit doctors and hospitals in Boston, where care is more costly. ACO savings are calculated on spending for a group of patients, regardless of where they receive care. The CMS Innovation Center, Weinstein said, should adjust savings tallies to account for patients to seek care outside of ACOs.
Other Pioneer ACOs that exited the program have cited other frustrations. Sharp HealthCare, for example, said the system was at a disadvantage because of the formula used to calculate disproportionate-share payments.
Dartmouth-Hitchcock may enter Medicare's Next Generation ACO program, a new test of the payment model that will begin in January, but Weinstein said that model also has flaws.
