Ken PerezOn July 16, The Centers for Medicare & Medicaid Services issued a press release on the results of the first year of the Pioneer ACO program, which constituted a rather mixed report card:

  • All 32 Pioneer ACOs successfully reported the required quality measures.
  • Costs for the more than 669,000 Medicare beneficiaries in Pioneer ACOs grew by 0.3 percent in 2012 versus 0.8 percent for similar beneficiaries in the same year.
  • Thirteen (40 percent) of the 32 Pioneer ACOs generated shared savings with CMS.
  • Nineteen (60 percent) of the 32 Pioneer ACOs failed to produce shared savings.
  • Nine (28 percent) of the Pioneer ACOs dropped out of the program, with seven stepping down to the less-risky “regular” Medicare Shared Savings Program (MSSP) and two—reportedly Plus (a partnership between North Texas Specialty Physicians and Texas Health Resources) and Presbyterian Healthcare Services—leaving the Pioneer program and not applying to the MSSP.
  • Ten (31 percent) of the 32 Pioneer ACOs failed to produce shared savings in year one but are staying in the program.
  • Two (6 percent) of the 32 Pioneer ACOs incurred sufficiently large losses to require penalty payments to CMS.

As one would expect, proponents and critics of ACOs have interpreted the results differently, as a glass half-full or half-empty. What’s not debatable is that the two-sided Pioneer model is risky and challenging, not at all like certain youth sports in which every player gets a trophy. 

The checkered results of the Pioneer program’s first year are reminiscent of what happened with the Physician Group Practice (PGP) Demonstration (2005-10), a precursor to the current Medicare ACO programs. 

During the first year of the PGP Demonstration, only two of 10 participating physician groups produced shared savings. Encouragingly, in year two of the project, four of the 10 groups achieved some shared savings, and in years three and four, five of the participants generated shared savings. It is fair to conclude that many of the PGP Demonstration participants improved their performance over time.

If the PGP Demonstration is a guide, one would expect the 23 Pioneers still in the program to generally show better results in the years ahead. There will undoubtedly be bumps in the road—especially if CMS piles on additional required measures in the future—but more effective population health management implemented through the ACO model holds great promise in improving quality and reducing cost.    

Ken Perez is a healthcare policy and IT consultant in Menlo Park, Calif. 


Publication Date: Tuesday, July 30, 2013