On May 17, 2011, the Centers for Medicare & Medicaid Services (CMS) announced that it is accepting applications for the Pioneer Accountable Care Organization Model (Pioneer ACO Model). The Pioneer ACO Model is designed to encourage organizations experienced in providing coordinated care across settings to move more rapidly towards population-based payment arrangements. It requires participants to work in coordination with private payers to achieve cost savings and improved health outcomes. Developed by the Center for Medicare & Medicaid Innovation in partnership with CMS, the Pioneer ACO Model is intended to operate in coordination with the Medicare Shared Savings Program.

The program relies heavily on the proposed rule for ACOs issued on March 31, 2011, with some important differences. These include more generous savings, greater risk exposure, and a faster track to partial capitation. Below are noteworthy highlights of the model:

  1. It requires participants to commit to entering outcomes-based (shared savings and/or risk) contracts with other payers (Medicaid, commercial, self-insured groups).  The contract will require these organizations to have the majority of the ACO's total revenues derived from outcomes-based arrangements by December 31, 2013. As part of the application, due July 18, 2011, potential pioneers will have to include letters of support from "each commercial purchaser or state Medicaid agency with which the applicant either has an existing outcomes-based contract, or a commitment to enter such a contract within the first two performance periods of the Pioneer Model."
  2. CMS will use a growth rate that is a 50/50 blend of ACO-specific and national average expense growth.
  3. Pioneers aren't subject to the 20% withhold described in the March 31 proposed rule.  However, they must provide CMS with "enforceable assurances" that they can reimburse CMS for full losses.  In addition, where applicable, Pioneers must attest that they are state-licensed, risk-bearing entities or exempt from the requirement.
  4. Pioneers are subject to a 1% MSR/MLR, and eligible for first dollar savings or losses.
  5. Beneficiaries can be assigned prospectively.
  6. Instead of requiring the ACO to offer the beneficiary to opt out of data sharing, CMS will mail the beneficiary a form to opt out. The beneficiary must affirmatively respond or is assumed to consent to data sharing.

Table 2. Optional Variations on the Core Payment Arrangement Available to Pioneer ACOs

  Performance Period 1
Performance Period 2
Performance Periods 3,4,5
Core Arrangement, OR
Up to 60% shared savings and shared losses 10% maximum
Up to 70% shared savings and shared losses 15% maximum
Population-based payment, with up to 70% shared savings and shared losses 15% maximum
Option A, OR
Up to 50% shared savings and shared losses 5% maximum
Up to 60% shared savings and shared losses 10% maximum
Population-based payments as in Core Payment Arrangement
Option B
Up to 70% shared savings and shared losses 15% maximum
Up to 75% shared savings and shared losses 15% maximum
Population-based, up to 75% shared savings and shared losses 15% maximum


Advance Payments: CMS does not make any specific comments on how this works. Advanced payments will be recouped from future shared savings. CMS does not mention what happens if there are no shareable savings or losses.

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