A Push for Collaborative Care Calls ACO Models into Question

In January 2012, 32 healthcare organizations became the first to participate in the Medicare Pioneer Accountable Care Organization (ACO) model. Now, over a year into the initiative, as many as 9 organizations are in deliberation of leaving the program. According the Centers for Medicare & Medicaid Services (CMS), at least 4 of those organizations are also contemplating a transfer to Medicare’s lower-risk ACO, the Shared Savings Program (SSP).

Unlike the SSP, the Pioneer ACO is based on a shared savings and losses payment model that incentivizes providers with higher levels of reward, but also has greater risks of financial penalty. Pioneer ACO's shared savings and losses are based on CMS-determined benchmarks. The better providers control costs for procedures and improve patient outcomes, the higher reward they can receive. While 2012 cost and quality results are not available yet, these ACOs now risk financial loss as they enter the second year of rewards and penalties based off those first year benchmarks.

Some Pioneer ACOs are considering the SSP, because unlike their current business model, it offers an option that poses no risk of financial penalties for the first three years. However, in exchange, there are fewer opportunities for higher return on reward.

Presbyterian Healthcare Service’s President and CEO, Jim Hinton, says their ACO is debating continued involvement because of concerns about geographic variation that could affect incentives. “Medicare's Pioneer program does not lock patients into the ACO's provider network,” Mr. Hinton said, “yet ACOs still are responsible for the quality and cost of patients' care. The CMS data needed to track performance was delayed.”

Medicare Pioneer ACOs must make their decision to continue participation by July 31.

Despite worries, there is still a strong demand for coordinated care that will drive cost savings and increase quality patient care nationally. At a recent conference, "The Changing Face of Coordinated Care - Medicaid ACOs,” held in Plainsboro, NJ, the consensus was that ACOs will have a growing role in improving care for communities - especially those that are in most need of affordable healthcare.

Dr Jeffrey Brenner, founder and executive director of the Camden Coalition of Healthcare Providers, said current healthcare delivery models need to revamped. Dr Brenner, who is well known for his efforts in improving healthcare coordination, says state governments like those in New Jersey will greatly contribute to healthcare reform. He also suggests that building a new model of healthcare requires a refocus on the intelligent use of data, and a need for the team-based approach in care management.

New Jersey Health Care Quality Institute President and CEO, David Knowlton, adds that there may be challenges to building successful ACOs, especially in creating incentives that will drive members of ACOs towards desired outcomes. “There is no question that the ACO could be a wonderful opportunity in collaborating hospitals and the delivery system,” Knowlton said. “It could also harm hospitals. If those incentives are not properly aligned, it won’t work.”

The future of directing collaborative care through ACOs will be determined by finding an effective delivery model that balances incentives with risk, and continues to push practitioners towards better quality, cost-effective care.

Around the Web

Pioneer ACO Model [CMS]

Several Pioneer ACOs May Exit Program [Modern Healthcare]

The Hot Spotters [The New Yorker]

Experts: Major Effort Needed to Coordinate Healthcare in NJ [NJ Spotlight]