Preparing your ACO downside risk success

The Pioneer ACO Model program has gotten some bad press. A significant number (13 of 32) have dropped out of the program, and under half (13 of 32 in 2012 and 11 of 23 in 2013) have earned the shared savings payments that are supposed to animate the program, so providers work to lower spending while maintaining a high quality of care.

But the Pioneer program has enjoyed a very good spring. Two high-profile studies, one in the New England Journal of Medicine by Harvard researchers and the other in JAMA by CMS officials, painted a rosy picture of the first two years of results.

And in April, both the GAO and the CMS Office of the Actuary came out with upbeat reports and, importantly, the actuary certified that the program could be expanded because it reduces the federal government’s health care bill or, at the very least, keeps it level.

This is not to say that there aren’t some clouds on the horizon. It’s clear from these reports that the results for the first year were better than those for the second year. That raises questions about how the Pioneer ACOs will do over the long haul.

What’s more, some of this early success may be a matter of the program having financial benchmarks that were relatively easy for some organizations to meet. According to the GAO report, the Pioneer ACOs that received shared savings payments from CMS started with financial benchmarks that were about $1,100 higher per beneficiary compared with those ACOs that did not generate shared savings. The benchmarks are based on past spending patterns, so in some cases they may favor high-spending provider organizations.

Still, the takeaway is that the Pioneer ACOs have been successful at managing cost with no apparent decline in quality. The Harvard researchers found that during the first year of the program, the per-beneficiary, per-month cost of the Pioneer ACOs was $29.20 less per quarter than the costs of a comparison group.

The CMS researchers confirmed and amplified what the Harvard researchers reported. In their reckoning, the PBPM costs of the Pioneer ACOs was $35.62 less than a control group in 2012 and $11.18 less in 2013. Most of the savings came from reducing hospital inpatient care.