The Centers for Medicare & Medicaid Services (CMS) announced the final list of 32 Pioneer Accountable Care Organizations (ACO) to start in the new year. CMS estimates that care coordination between hospitals, physicians and other caregivers under the Pioneer ACO model could save Medicare up to $1.1 billion.
CMS noted that the Pioneer ACO Model is a CMS Innovation Center initiative designed to support organizations with experience operating as ACOs or in similar arrangements in providing more coordinated care to beneficiaries at a lower cost to Medicare. The Pioneer ACO Model is also designed to support organizations with a new payment model, allowing them to provide more coordinated care to beneficiaries at a lower cost to Medicare. The Pioneer ACO Model will test the impact of different payment arrangements in helping these organizations achieve the goals of providing better care to patients, and reducing Medicare costs.
The Innovation Center was created by the Affordable Care Act to test new models of health care delivery and payment. The Center also offers technical support to providers to improve the coordination of care and share lessons learned and best practices throughout the health care system. It is committed to refining the Medicare, Medicaid and CHIP programs to deliver better care for individuals, better health for populations, and lower growth in expenditures.
The Pioneer ACO Model was designed specifically for organizations with experience offering coordinated, patient-centered care, and operating in ACO-like arrangements. The selected organizations were chosen for their significant experience offering this type of quality care to their patients, along with other criteria listed in the Request for Applications (RFA). These organizations were selected through an open and competitive process from a large applicant pool that included many qualified organizations.
According to a press release from the Department of Health and Human Services (HHS), the Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years.
Under this initiative, Medicare will reward groups of health care providers that have formed ACOs based on how well they are able to both improve the health of their Medicare patients and lower their health care costs.
Among the list are Banner Health Network in Arizona, Dartmouth-Hitchcock ACO in New Hampshire and Eastern Vermont, Monarch Healthcare in Orange County, Calif., as well as Beth Israel Deaconess Physician Organization, Partners Healthcare and Steward Health Care System, all in Massachusetts. CMS chose 32 out of a pool of competitive applicants through a lengthy and open process, according to CMS.
Selected Pioneer ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country, representing 18 States and the opportunity to improve care for about 860,000 Medicare beneficiaries.
“Pioneer ACOs are leaders in our work to provide better care and reduce health care costs,” said Health & Human Services Secretary Kathleen Sebelius. “We are excited that so many innovative systems are participating in this exciting initiative – and there are many other ways that health care providers can get involved and help improve care for patients.”
The Medicare Shared Savings Program and the Advance Payment ACO Model, both announced in October 2011, are also ACO options for providers. The Medicare Shared Savings Program, which was established by the Affordable Care Act, provides incentives for ACOs that meet standards for quality performance and reduce cost while putting patients first. The Advance Payment ACO Model will provide additional support to physician-owned and rural providers participating in the Shared Savings Program who would benefit from additional start-up resources to build the necessary infrastructure, such as new staff or information technology systems. More information about the full menu of options for providers and how to apply to participate is available here.
As the forerunner to the Medicare Shared Savings Program, the Pioneer ACO model will allow those organizations and individual providers that already are experienced in coordinating care to reap the benefits earlier and more of them. These groups will move more rapidly from a Shared Savings model to a population-based payment model, according to the press release.
The first performance period of the Pioneer ACO model will start Jan. 1, 2012. In the first two performance years, the Pioneer Model tests a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the Shared Savings Program. These shared savings would be determined through comparisons against an ACO’s benchmark, which is based on previous CMS expenditures for the group of patients aligned to the Pioneer ACO.
In year three of the program, those Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model. Population-based payment is a per-beneficiary per month payment amount intended to replace some or all of the ACO’s fee-for-service (FFS) payments with a prospective monthly payment.
The Pioneer ACO Model is distinct from the Shared Savings Program. The Shared Savings Program fulfills a statutory obligation set forth by the Affordable Care Act to establish a permanent program that develops a pathway forward for groups of health care providers to become ACO’s, while the Pioneer ACO Model is an initiative designed to test the effectiveness of a particular model of payment. Final rules for the Shared Savings Program were published in November 2011.
The Pioneer ACO Model differs from the Medicare Shared Savings Program in the following ways, among others:
- The first two years of the Pioneer ACO Model are a shared savings payment arrangement with higher levels of savings and risk than in the Shared Savings Program.
- Starting in year three of the initiative, those organizations that have earned savings over the first two years will be eligible to move to a population-based payment arrangement and full risk arrangements that can continue through optional years four and five.
- Pioneer ACOs are required to develop similar outcomes-based payment arrangements with other payers by the end of the second year, and fully commit their business and care models to offering seamless, high quality care.
Additionally, during the application process, organizations were invited to propose alternative payment arrangements. CMS established two alternatives to the core payment arrangement discussed above based on this input. Both of these alternatives follow a shared savings model in years one and two, and provide an option for a partial population based payment that removes limits on rewards and risks in year three. These arrangements will allow Pioneer ACOs more flexibility in the speed at which they assume financial risk. Under the Pioneer ACO Model, CMS will prospectively align beneficiaries to ACOs, allowing care providers to know at the beginning of a performance period for which patients’ cost and quality they will be held accountable.
“We know that health care providers are at different stages in their work to improve care and reduce costs,” said Marilyn Tavenner, acting Administrator of CMS. “That’s why we’ve developed a menu of options for Medicare to meet doctors, hospitals, and other healthcare providers where they are, and begin the conversation of how to enhance the care they are offering to people with Medicare.”
In addition, under the Pioneer ACO Model, beneficiaries will maintain the full benefits available under traditional Medicare (fee-for-service), as well as the right to receive services from any healthcare provider accepting Medicare patients.
Moreover, to ensure beneficiaries receive high quality care and enjoy a positive experience, CMS has established robust quality measures that will be used to monitor the quality of care provided and beneficiary satisfaction. These measures mirror those in the Shared Savings Program.
To be eligible to participate in the Pioneer ACO Model, organizations are required to be providers or suppliers of services structured as:
1) ACO professionals in group practice arrangements;
2) Networks of individual practices of ACO professionals;
3) Partnerships or joint venture arrangements between hospitals and ACO professionals;
4) Hospitals employing ACO professionals; or
5) Federally Qualified Health Centers (FQHC).
Health Information Technology
By the end of 2012, Pioneer ACOs must attest and CMS will confirm that at least 50% of the ACO’s primary care providers have met requirements for meaningful use of certified electronic health records (EHR) for receipt of payments through the Medicare and Medicaid EHR Incentive Programs.
Minimum Number of Aligned Beneficiaries
Beneficiaries are aligned to ACOs through the healthcare providers that choose to participate. CMS will review where a beneficiary has been receiving the plurality of his/her primary care services, and use that information to establish which beneficiaries are aligned to a participating provider. If a primary care provider chooses to participate in an ACO, the beneficiaries aligned to him or her through this process would be aligned to the ACO. If a beneficiary receives less than 10 percent of their care from a primary care provider, CMS will review where a beneficiary has been receiving the majority of his/her specialty services to determine alignment.
Participants generally must have a minimum of 15,000 aligned beneficiaries unless located in a rural area, in which case are to have a minimum of 5,000 beneficiaries. In order to be aligned, beneficiaries must be enrolled in original, fee for service Part A and B Medicare. They cannot be participating in Medicare Advantage plans.
Participation of Other Payers
The Innovation Center believes that Pioneer ACOs will be more effective in producing improvements in the three-part aim of better care for individuals, better health for populations, and slower growth in expenditures if they fully commit to a business model based on financial and performance accountability. The Innovation Center therefore requires Pioneer ACOs to enter similar contracts with other payers (such as insurers, employer health plans, and Medicaid) such that more than 50 percent of the ACO’s revenues will be derived from such arrangements by the end of the second Performance Period.