Pioneer ACO Model Cuts Medicare Costs, Receives Certification

Susan London

May 04, 2015

Medicare beneficiaries cared for in Pioneer accountable care organizations (ACOs) had a smaller rise in healthcare spending than traditional fee-for-service beneficiaries without any compromise in the experience of care, suggest data from the program's first 2 years. Aggregate savings amounted to $385 million ($280 million in 2012 and $105 million in 2013), researchers report in an article published online May 4 in JAMA.

After publication of the data, the Centers for Medicare & Medicaid Services (CMS) held a press conference today to release an independent evaluation report by the US Department of Health and Human Services and to announce that the independent Office of the Actuary in CMS has certified the model as the first to meet stringent criteria for expansion to more Medicare beneficiaries.

"The Pioneer ACO model was a 5-year test because we thought it might take that long to generate results.... We are excited that as opposed to it taking 5 years for the Pioneer ACO model to be certified for expansion based on the quality results and the reduced costs, we actually have so robust results that we are able to certify the model after only 2 years of evaluation," commented Patrick Conway, MD, acting principal deputy administrator, deputy administrator for innovation and quality, and chief medical officer of CMS.


Launched in 2012 by CMS, the Pioneer ACO Model aims to motivate healthcare organizations to reduce expenditures while improving quality of care for fee-for-service Medicare beneficiaries. Pioneer ACOs whose annual spending is less than projected can share the savings with CMS, conditional on their quality of care. Beneficiaries are aligned (assigned) to ACOs on the basis of their past use of providers, although they can still use other Medicare-participating providers if they wish.

David J. Nyweide, PhD, from CMS and the Center for Medicare and Medicaid Innovation, both in Baltimore, Maryland, and colleagues studied fee-for-service Medicare beneficiaries, comparing those who were aligned with the 32 Pioneer ACOs (675,712 in 2012 and 806,258 in 2013) with those in the same markets who were eligible but not aligned (13.2 million in 2012 and 12.1 million in 2013). As previously reported by Medscape Medical News, a separate analysis of year 1 data from the Pioneer ACOs also showed a modest reduction in spending.

In the current study, Dr Nyweide and colleagues compared the groups on the change in expenditures between a baseline period (2010-2011) and a performance period (2012-2013) and found that the ACO-aligned beneficiaries had smaller increases in total spending, determined from claims data, than the eligible beneficiaries.

Much of the difference in spending was a result of greater decreases in inpatient use among ACO-aligned beneficiaries. However, they also had greater decreases in primary care evaluation and management office visits and smaller increases in the use of tests, procedures, and imaging. The ACO-aligned beneficiaries had a greater increase in follow-up visits after hospital discharge, but the groups did not differ with respect to 30-day readmissions.

Responses on the Consumer Assessment of Healthcare Providers & Systems survey among random samples showed that the ACO-aligned beneficiaries had higher adjusted mean scores than the other beneficiaries for timely care and clinician communication and similar scores for ease of getting care and access to specialists.

"These results are encouraging, given how historically challenging it has been for physicians to achieve spending reductions in Medicare demonstration projects," the investigators conclude. "Despite decreases in spending growth, results from this study and previously reported data on Pioneer ACOs' performance on clinical quality measures suggest it is possible to reduce expenditure growth while maintaining or improving quality in a [fee-for-service] payment environment."

Model is Scalable, CMS Says

During the press conference, CMS's Dr Conway pointed out additional, noteworthy findings in the report showing that of the 32 Pioneer ACOs, 10 had significant savings in both years, 10 had significant savings in only 1 year (two of which had significant losses in the other year), and 12 had neither significant savings nor losses. The amount saved per beneficiary varied considerably.

Although acknowledging that the program had lower savings overall in its second year, Dr Conway noted that they were still significant. "I would not read too much into a single data point.... I think we are going to have to continue to follow to year 3, which will be the next evaluation report," he said.

"This certification bolsters CMS confidence that scaling elements of the Pioneer ACO Model will benefit people across the nation and is a remarkable achievement under the Affordable Care Act," Dr. Conway maintained.

CMS plans to incorporate successful design elements of the model into a next-generation model and existing programs, such as the Medicare Shared Savings Program, he said. Those elements include, among others, prospectively identifying ACOs' beneficiary populations, offering ACOs a higher percentage of shared savings, and allowing patients to proactively assign themselves to an ACO.

"The Pioneer ACO Model is showing that patients can get the right care at the right time, doctors can provide high-quality and coordinated care, and we can generate savings for Medicare and the healthcare system at large," Dr. Conway concluded.

Longer Follow-up Still Needed

Authors of two editorials published alongside the paper in JAMA concurred that more data and longer follow-up will be needed to see understand the real potential of the model. In one of the accompanying editorials, Lawrence P. Casalino, MD, PhD, from the Weill Cornell Medical College, Healthcare Policy and Research, New York City, notes that the Pioneer ACO program's savings in the first year was 4%. "This amount may seem small, but if this rate of savings could be sustained, and achieved throughout a large part of the US health care system, it would be more than enough to 'bend the cost curve' so that health care expenditures do not continue to increase as a percentage of the gross domestic product and the federal budget," he maintains.

Dr Casalino questions, however, whether this savings rate can be maintained, as second-year savings were only a third of first-year savings. "It is possible that during the first year these ACOs were able to 'grasp the low-hanging fruit' — to address relatively easy ways to control costs — and that the savings they generate will be much smaller, at best, in subsequent years. Alternatively, it may be that it will take time for ACOs to develop better processes to improve the care of their patients and that they will be able [to] continue to lower costs for years to come."

In the other editorial, Mark McClellan, MD, PhD, from The Brookings Institution in Washington, DC, writes, "This early evidence moves the effects of ACOs from speculation to reality and highlights the importance of further evaluation as alternative payment models are refined. Payment reform moving away from fee for service is now part of the policy landscape, but the exact form it will take is less clear."

"Incorporating evaluations like this alongside the implementation of further ACO payment reforms would help ensure that many health care organizations do not end up in alternative payment models that are not improving care and also would provide more evidence that clinicians could use to succeed in ACOs," he adds. "Payment reform has a long way to go, but it is possible for further steps to be guided by the development of better evidence."

The investigators have disclosed no relevant financial relationships. Dr Casalino has reported receiving personal fees for serving as a member of the American Medical Association Advisory Committee on Professional Satisfaction, Care Delivery, and Payment; serving, without financial compensation, as a member of the American Hospital Association Committee on Research, the board of trustees of the Health Research and Education Trust, and the American Medical Group Foundation board of directors; part-time employment as a senior advisor to the director of the Agency for Healthcare Research and Quality; and past service with two of the coauthors of the article by Nyweide and colleagues, as coinvestigator and coauthor, on articles unrelated to accountable care organizations. Dr McClellan has disclosed no relevant financial relationships.

JAMA. Published online May 4, 2015. Article full text, Casalino editorial full text, McClellan editorial full text


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