Sharp HealthCare in San Diego dropped out of the Medicare Pioneer accountable care organization (ACO) program, citing fundamental flaws in the program, according to the company's third quarter financial statement.
"Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance," Sharp said in the report.
The five-hospital system is the tenth ACO to leave the initiative, a model that encourages providers and caregivers to deliver more coordinated care for Medicare beneficiaries while curtailing costs, with 22 of the original 32 Pioneer ACOs remaining. Sharp ACO leaves behind 28,000 Medicare beneficiaries who will be transferred to other care management organizations.
"In evaluating participation for the year ended Dec. 31, 2014 ("Performance Year 3"), Sharp ACO determined it was at risk for a significant shared loss, despite meaningful reductions in readmission rates and hospital and skilled nursing utilization," the financial statement reads.
Although all 32 of the original ACOs met quality performance metrics, 25 reduced readmissions rates and more than one-third reduced costs, experts said the ACO model isn't the proper fit for some healthcare organizations. Last summer Centers for Medicare & Medicaid Services confirmed that nine ACOs left the Pioneer program, stating that seven did not produce savings but intended to apply to the alternative ACO model, the Medicare Shared Savings Program. Two others left the program completely, FierceHealthcare previously reported.