Pioneer, Next Generation ACOs saved Medicare millions

Editor's Note: Production Editor Eli Richman contributed to this report. 

The Pioneer accountable care organization model may have had its share of troubles over the five years of its existence, but the latest data from the Centers for Medicare & Medicaid Services shows that the eight remaining participants generated savings in the final year of the program.

CMS last week quietly released (Excel download) the 2016 financial and quality results of the final year of the Pioneer ACO model, a pilot program under the Center for Medicare & Medicaid Innovation that tested the cost savings potential of physicians, hospitals and healthcare providers working together to improve the quality of care for Medicare beneficiaries.

The model was launched in 2012 with 32 participants but 24 ACOs eventually dropped out of the experimental program for various reasons; some didn’t produce savings, a few suffered significant financial losses, others failed to meet performance goals and some moved to the less-risky Medicare Shared Savings Program.

CMS has yet to release the 2016 results of the MSSP program. 

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But collectively, the eight ACOs that stuck with the Pioneer model in its final year generated gross savings of $68 million, according to the CMS data.

Six of the participants earned enough in 2016 to qualify for shared savings. CMS paid Allina Health, Atrius Health, Banner Health Network, Fairview Health Services, Michigan Pioneer ACO and Montefiore ACO more than $37 million in shared savings. The remaining two ACOs—Monarch HealthCare and Partners HealthCare—didn’t earn enough for shared savings but also didn’t owe losses to CMS.

All eight ACOs also had high scores for quality ranging from 88.9% to 95.7%.

First-year results of Next Generation model 

CMS also released (Excel download) information on the first year of its newest ACO initiative, The Next Generation model, which asks participants to take on more financial risk with the potential to obtain a greater reward. The program aims to test whether strong financial incentives for ACOs, along with tools to support better engagement and care management, can improve health outcomes and lower costs for Medicare beneficiaries.

The new model had promising results in 2016, according to the data.  All 18 ACOs that participated in the Next Generation ACO model earned scores of 100% for quality based on 33 benchmarks.

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Eleven of the 18 participants generated gross savings of more than $71 million for Medicare. Those ACOs also earned shared savings and collectively earned $58 million for their efforts. The other seven ACOs lost money and ended up paying back more than $20 million to CMS.

The previous CMS administration would often tout the successes of the program each year in press releases, but this year the agency quietly uploaded the financial and quality performance results of both the Pioneer and Next Generation Models under its Milestones and Updates section about the models.

But the National Association of ACOs, the largest association of ACOs, said it was encouraged by the results, which the organization said demonstrates the value of accountable care models.

“The overall amount of savings and the proportion of those qualifying for earned shared savings reflects the deep commitment these organizations have to changing how care is delivered and demonstrates very positive results for beneficiaries and for Medicare. This sends a strong message about the role of accountable care models and their significant contributions to Medicare,” the organization said in a statement emailed to FierceHealthcare.

Results encouraging, but changes needed

Joe Damore, vice president of population health management for Premier, an alliance of approximately 3,900 U.S. hospitals and more than 150,000 other provider organizations, also said in an announcement that the data shows that both Next Generation ACOs and Pioneer ACOs made progress in improving the health of a Medicare population, reduced healthcare costs and lead the change from volume-based, sickness-focused model to a value-based, wellness-focused health system. He noted that the organizations that participated in both models saved Medicare nearly $149 million in 2016 and hundreds of millions of dollars in five years.

“These results demonstrate that value-based care and payment can successfully lead to better care and improved health and outcomes at a lower cost—when the conditions are right,” he said.

Damore noted that all five Next Generation and Pioneer ACOs that participated in Premier’s Population Health Management Collaborative achieved shared savings, representing 33% of the total savings but just 19% of the program participants.

However, he said the results also show the challenges of consistently succeeding in an advanced, two-sided risk model. Part of the problem, he said, is federal policies that impede success, such as the lack of waivers from antiquated fee-for-service rules, barriers to helping beneficiaries choose best settings for post-acute and other care, incomplete access to complete patient claims information for coordinated care management, limits to beneficiary engagement services such as waived co-pays or meal/transportation vouchers, and the complexity and incompatibility of various federal programs with one another and private payer contracts.

"These issues urgently need to be addressed and resolved with provider input in order to ensure continued success and further savings for the Medicare program," he said, "particularly as more providers look to two-sided risk models in order to capture incentive payments, as promised in the MACRA Quality Payment Program."