Nine Pioneer ACOs May Leave the Medicare Program

July 11, 2013

Way back in 2011, the federal government chose 32 organizations to participate in the Pioneer Accountable Care Organization (ACO) Model. Accountable Care Organizations are groups of doctors, hospitals, and health care providers that voluntarily come together to provide coordinated care to Medicare patients. ACOs aim to save money by providing more efficiently managed care. Providers forgo traditional fee-for-service payments, where the hospital charges for each service administered, and instead receives a fixed monthly stipend for each patient. The ACO model would test the implementation of different payment arrangements to improve the quality of care and reduce Medicare costs.

Nearly a year later in 2012, the department of Health and Human Services announced that another eighty-nine ACOs would be added to the Medicare program. The addition added 1.2 million people to the program and estimated a four year total savings of $940 million.  

A sign that not all may be going as well as hoped was the recent announcement that nine of the original 32 pioneer ACOs may leave the Medicare program. The program was set up for large healthcare organizations that already had some experience providing coordinated care for patients. But some hospitals and health care systems are discovering that it is more difficult to manage the financial risk of sick Medicare patients than previously thought.

These nine pioneer ACOs have run into a number of stumbling blocks that inhibit them from working as efficiently and cost-effectively as they need to, to stay intact.

ACO hospitals are required to control the costs of the population of Medicare recipients in their assigned area, but their actual ability to assert control over patient’s care choices is limited. For example, Medicare allows patients to choose their primary care physicians , so ACOs can’t stop a patient from visiting the doctor of their choice, even if it is outside of their network.

Other struggles relate to the collection and reporting of data, access to claims information, and the quality of data benchmarking. Medicare is six months behind in providing the pioneer ACOs with medical claims data, the critical information they need to track spending on their assigned patients. The inability to function with the tools necessary to succeed has forced some ACOs to rethink the financial sustainability of their organizations.

But, there are still 112 ACOs that, as far as we know, have not run into these problems or financial uncertainty and remain in the program. Some have seen benefits so significant that they plan on expanding. The insurance giant United Health Care plans on increasing its spending on affordable care contracts from $20 billion today to $50 billion in 2017. They report a savings of 4.5% on medical costs since the implementation of ACOs in 2010.

While the departure of the nine Pioneer ACOs is significant as it may point to larger problems with the ACO concept, it doesn’t constitute a monumental shift. Nine organizations are considering leaving, but at least four of those will switch over to another accountable care program with less financial risk. So while some of the pioneer ACOs are changing form and evolving, most will continue with business as planned or switch to a similar payment method without returning to a fee-for-service system.

Read more on ACOs here:

4 Responses to “Nine Pioneer ACOs May Leave the Medicare Program”

  1. […] Nine Pioneer ACOs May Leave the Medicare Program ( […]

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