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Health Insurance & Affordable Care Act

9 Pioneer ACOs Jump Ship After First Year

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One of the Pioneers that is dropping out of Medicare’s ACO programs entirely is Presbyterian Healthcare Services in New Mexico. CMS did not identify the other organization that is dropping out.

“We really did learn a lot as a Pioneer ACO,” says Todd Sandman, vice president of strategy at Presbyterian. The decision to leave the program was informed by the data they received from CMS, which showed the health system had not saved money. The biggest problem for the system, he says, was geography — and the fact that there wasn’t much waste to cut. “New Mexico has historically been a low-cost and low-utilization environment” compared to other states, Sandman explains. “So there wasn’t much opportunity to reduce excess utilization and save dollars.”

Chas Roades, chief research officer at the Advisory Board Company in Washington, D.C., says that’s not surprising. The systems selected to be Pioneers were the crème de la crème — hospitals that have already improved the way their care is delivered. “Most of the low hanging fruit is already gone in most cases,” he says, making it harder to further lower costs.

Despite the drop-outs, Roades thinks “the [Pioneer] program is off to a decent start. I’m not hugely surprised that not everyone saved money in the first year.” Part of the problem, says Roades, is that the “year got off to a slightly bumpy start” with some data sharing problems that made it difficult for the hospitals to determine where they might be able to save money. The Pioneers had also raised concerns about the quality metrics.

“Going forward, I think we should temper our expectations about how much money we’re as actually going to save through ACOs,” says Roades. ACOs are basically a transitional “hybrid model” that preserves the Medicare fee-for-service system and only applies to a portion of the patients that hospitals see. “It’s really hard to run two disparate sets of books at the same time” and two sets of incentives, he adds.

There are also a slew of different Medicare demonstration projects and private ACOs that these health systems might be part of.  Just because they drop out of the Pioneer program does not mean they’re abandoning the concept.

Tue, Jul 16 2013

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