The most ambitious accountable care effort by the CMS will enter its final year with half the participants that began the program.
In 2012, 32 accountable care organizations became Pioneers who would accept the risk of losses—but also the potential for bonuses—based on how well hospitals and doctors could control Medicare spending and deliver quality care.
The CMS refused to say how many Pioneers have dropped out, but the number that have publicly exited the program grew this week to 16. Mount Auburn Cambridge Independent Practice Association and the Steward Health Care System, both based in Massachusetts, have withdrawn. That follows the news last month that Dartmouth-Hitchcock Medical Center in Lebanon, N.H., had left the program.
The departures come as the CMS Innovation Center prepares to name ACOs that will join another test of accountable care as of January. Named the Next Generation, the new model may address the disadvantage felt by some Pioneer ACOs. ACOs earn bonuses or face penalties based on whether spending for their patients is lower or higher than a target set by the CMS. Efficient ACOs have less waste to squeeze out, and therefore, less potential for gain and more risk of losses, they said. ACOs and the CMS have wrangled over how to set the targets.
“It's going to be an iterative process,” said Josh Seidman, senior vice president for consultant Avalere Health. “It's going to require some trial and error to get the right formulas.”
So far, Pioneers have had the most at stake financially in Medicare's test of accountable care, which also includes the large and growing Medicare shared-savings program. ACOs in the shared-savings program can avoid financial losses by agreeing to accept smaller bonuses. Pioneers had that option in year one, but the risk for losses quickly grew.
Next Generation ACOs will also accept risk for losses—more than Pioneers under the option of full capitation—but they'll also have more flexibility to use telemedicine and home visits.
For the CMS, former Pioneers that enter the Next Generation program would be good news, suggesting that some providers are able and eager to put their revenue at risk for better quality, patient satisfaction and cost control, said Dr. Kavita Patel, a senior fellow at the Brookings Institution. “They were called Pioneers for a reason,” she said. “They were supposed to be the organizations that would lead the country in taking on clinical and financial risk.”
Early Pioneers to exit the program joined the shared-savings program and avoided the risk of losses. Overall, Pioneer ACOs have had mixed results on holding spending below target. One recent study found that clinically, Pioneers provided less care with little benefit.
“If we can't get the model for clinical and financial risk right, we're really not doing anything new and innovative on payment,” she said. “We're just tweaking what we're doing now.”
What Medicare does now—known as fee-for-service—is widely criticized for paying hospitals and doctors based on the volume of patients they treat and services they provide. That creates an incentive to do more without regard to cost or need.
The Pioneer experience has taught the CMS what works and what doesn't, and that's reflected in Next Generation, Patel said.
The Steward Health Care System's ACO is preparing to enter the Next Generation in January and that required the system to drop out of the Pioneers for the final year, said Dr. Sanjay Shetty, president of the Steward Health Care Network. The ACO has been accepted to the Next Generation model but is waiting to see how spending targets will be set.
Likewise, the Mount Auburn Cambridge Independent Practice Association will decide in December whether to join the Next Generation program, once the CMS provides final program details which are expected next month.
Mount Auburn remains “extremely committed” to the ACO concept, but changes to the spending target formula this year put the ACO at risk for financial losses, President Dr. Barbara Spivak said. The Innovation Center adjusted spending targets to reflect ACO savings during the Pioneers' first three years. That made future savings more difficult to accomplish. That, along with other changes, prompted Mount Auburn to drop out, she said.
The Dartmouth-Hitchcock ACO, which owed $3.6 million at the end of 2014, exited the program for that reason, CEO Dr. James Weinstein said when the ACO announced it would withdraw.
Dartmouth-Hitchcock, too, will decide next month whether to join the Next Generation ACO.
The latest Pioneer departures, are “not alarming,” said David Muhlestein, senior director of research and development for consulting firm Leavitt Partners. The program was designed to be temporary and the CMS has created new opportunities as the agency recognizes that different providers need different models,” he said. “Not everybody can enter into every risk arrangement.”
