Tuesday, May 5, 2015
May 4, 2015
Affordable Care Act payment model saves more than $384 million in two
years, meets criteria for first-ever expansion
Today, an independent evaluation report released by the Department of
Health and Human Services showed that an innovative payment model
created as a pilot project by the Affordable Care Act generated
substantial savings to Medicare in just two years. Additionally, the
independent Office of the Actuary in the Centers for Medicare & Medicaid
Services (CMS) has certified that this patient care model is the first
to meet the stringent criteria for expansion to a larger population of
The independent evaluation report for CMS found that the Pioneer
Accountable Care Organization (ACO) Model generated over $384 million in
savings to Medicare over its first two years – an average of
approximately $300 per participating beneficiary per year – while
continuing to deliver high-quality patient care. The Actuary's
certification that expansion of Pioneer ACOs would reduce net Medicare
spending, coupled with Secretary Sylvia Mathews Burwell's determination
that expansion would maintain or improve patient care without limiting
coverage or benefits, means that HHS will consider ways to scale the
Pioneer ACO Model into other Medicare programs.
"This is a crucial milestone in our efforts to build a health care
system that delivers better care, spends our health care dollars more
wisely, and results in healthier people," said HHS Secretary Sylvia M.
Burwell. "The Affordable Care Act gave us powerful new tools to test
better ways to improve patient care and keep communities healthier. The
Pioneer ACO Model has demonstrated that patients can get high quality
and coordinated care at the right time, and we can generate savings for
Medicare and the health care system at large."
Pioneer ACOs are part of the innovative framework established by the
Affordable Care Act to move our health care system toward one that
rewards doctors based on the quality, not quantity, of care they give
patients. HHS earlier this year announced the ambitious goal of tying 30
percent of Medicare payments to quality and value through alternative
payment models by 2016 and 50 percent of payments by 2018.
May 4, 2015
Association of Pioneer Accountable Care Organizations vs Traditional
Medicare Fee for Service With Spending, Utilization, and Patient Experience
By David J. Nyweide, PhD; Woolton Lee, PhD; Timothy T. Cuerdon, PhD;
Hoangmai H. Pham, MD, MPH; Megan Cox, MHA; Rahul Rajkumar, MD, JD;
Patrick H. Conway, MD, MSc
During Pioneer ACOs' first 2 performance years, total spending for
1 481 970 aligned beneficiaries increased approximately $385 million
($280 million in year 1; $105 million in year 2) less than spending of
similar FFS beneficiaries. A large portion of the smaller increase in
spending was from decreases in inpatient utilization among ACO-aligned
beneficiaries, although greater decreases in primary care evaluation and
management office visits, and smaller increases in the use of tests,
procedures, and imaging services, also were related to the observed
differential changes in spending. There was no difference in all-cause
readmissions within 30 days of discharge, but follow-up visits after
hospital discharge increased more for ACO-aligned beneficiaries.
Beneficiary reports of care experiences were similar to both the general
FFS and Medicare Advantage populations in the first performance year and
may have been better in terms of timely care and clinician communication.
Although such success may be replicable in regions with varying market
characteristics, not all ACOs did well fiscally—one-third of Pioneer
ACOs did not generate lower expenditure growth relative to their
comparison populations in their first 2 years, and 2 generated
significantly higher expenditure growth their second year. Multiple
factors may contribute to these findings. It may take more time for some
ACOs to redesign care delivery and learn how to effectively manage the
care of a population of FFS Medicare beneficiaries to realize smaller
increases in spending. CMS may also need to reexamine specific design
elements to facilitate better performance, such as expenditure
benchmarking methodologies that are more predictable to the ACO or
enhanced benefits and other tools to engage beneficiaries. Reducing
Medicare spending through the Pioneer ACO model, then, likely depends on
an array of market, organizational, programmatic, and physician-related
factors that should be better understood in future implementation and
For individual Pioneer ACOs, the results of this
difference-in-differences analysis differ from the results that
determine whether they share in savings with CMS. The latter results
were derived from reconciling the ACO's projected and actual spending
levels as part of their financial incentive to participate in the model,
whereas the primary goal of this analysis was to assess the performance
of Pioneer ACOs on a set of key spending and utilization outcomes
compared with such outcomes in the absence of the intervention. This
study does not address other important concerns such as the degree to
which the Pioneer ACO model can sustain small increases in spending and
high quality performance over longer periods or whether Pioneer ACOs can
achieve a meaningful return on investment for the resources they devote
to improving care. These results are also limited to Pioneer ACOs and do
not include other types of Medicare ACOs.
May 4, 2015
Accountable Care Organizations and Evidence-Based Payment Reform
By Mark McClellan, MD, PhD
The study by Nyweide et al in this issue of JAMA is the most
comprehensive to date on the association of Medicare's Pioneer ACO
program with spending and beneficiary experience with care. Because
beneficiaries cannot be randomized to a Pioneer ACO, the authors
compared annual changes among beneficiaries assigned to the ACOs with
changes among beneficiaries in the same region who were not in an ACO or
a Medicare Advantage plan.
In the first year, the spending difference was largely attributable to
fewer physician encounters and hospital admissions; in the second year,
reductions in "preventable" hospitalizations for complications that may
be affected by ambulatory care were more important.
These early results may be viewed as modest. The smaller increase in
spending amounted to 4% in year 1 and less than 1.5% in year 2 (though
the 2 estimates do not appear statistically different). The estimates do
not account for the shared-savings payments to the ACOs, which totaled
$77 million in 2012. Nor do they account for the investments of time and
money made by the health care organizations.
L&M Policy Research
March 190, 2015
Prepared for: Centers for Medicare & Medicaid Services
Attn: David Nyweide, Ph.D.
Pioneer ACO Evaluation Findings from Performance Years One and Two
Lisa Green, Project Director
From "Results at a Glance"
* Pioneer ACOs saved a total of $384 million over the first two
performance years; most of these savings accrued in the first
performance year ($279.7 million in the first performance year ;
$104.5 million in the second performance year ).
* Total spending relative to local markets varied for the 32 individual
* Ten Pioneers had statistically significant savings in both
* Ten Pioneers had statistically significant savings in only one of
the two performance years; two of these Pioneers had significant losses
the other year.
* Twelve Pioneers had no statistically distinguishable savings or losses.
* Pioneer ACO features explored to date—including hospital
relationships, ability to follow beneficiaries across the care
continuum, and ACO leadership—do not appear to explain the differences
in Pioneer ACOs' spending performance in the first two years of the
model. Provider engagement activities suggest some relationship with
Pioneer ACOs' performance. These findings may be attributable, in part,
to the somewhat limited variation in observed structural characteristics
that can be measured consistently from available qualitative data across
all Pioneer ACOs.
* Overall spending performance was mainly accompanied by utilization
reductions in acute inpatient settings. As a group, Pioneer ACO results
showed lower-than-expected utilization in acute inpatient stays and
physician services in the first and second performance years compared to
local markets. The 10 Pioneers with savings in both performance years
had particularly steep reductions in acute inpatient stays.
* Pioneer ACOs collectively had per-beneficiary-per-month savings in
2012 relative to near markets on physician services, inpatient hospital,
hospital outpatient, skilled nursing facility, home health, hospice, and
durable medical equipment services. However, the magnitude of savings in
these settings was lower in 2013.
* Consumer Assessment of Healthcare Providers and Systems (CAHPS)
surveys of aligned Pioneer beneficiaries found that Pioneer ACOs
exhibited few changes in patient experience between the first and second
performance year. In addition, most ACOs have similar levels of
performance to one another in the domains we examined. There appears to
be little relationship between savings and high or low CAHPS scores.
* Pioneer ACOs continue to rely largely on internal sources of learning.
Although ACO leadership report gaining insights from consultants,
commercial payers, and self-insured employers, they find that as
innovators, they have more experience within their organizations that
they can draw on than from external sources. Pioneers ACOs had the
greatest participation in learning system topics related to cost
savings, financial data analysis, and quality results/quality
Descriptive examination of key ACO features did not reveal measured
characteristics that appear to be related to ACOs' two-year spending
results. This finding may be attributable, in part, to the somewhat
limited variation in observed structural characteristics that can be
measured consistently from available qualitative data across all Pioneer
ACOs. For those features where we do observe variation, such as
relationship with a hospital or whether ACO providers use a single EHR,
it appears that they do not explain Pioneer ACOs' two-year spending
results. One suggestive finding is around provider engagement, where
ACOs that place more emphasis on engaging providers through incentives
and referral management activities may be better positioned to achieve
savings. Ongoing collection and analysis of qualitative data may provide
additional insights into key operational features or may reveal that
other factors, such as market characteristics, are bigger drivers of
Comment by Don McCanne
Although most reports about the initial experiences with the Pioneer ACO
model have been relatively disappointing, nevertheless HHS Secretary
Sylvia Burwell in a press release states, "The Pioneer ACO Model has
demonstrated that patients can get high quality and coordinated care at
the right time, and we can generate savings for Medicare and the health
care system at large."
The release further states, "this patient care model is the first to
meet the stringent criteria for expansion to a larger population of
Medicare beneficiaries." HHS intends that, by 2018, 50 percent of
Medicare payments will be tied to quality and value through such
"alternative payment models."
This study was done with highly select "Pioneer" organizations that were
already geared up to put into place policies intended to accomplish the
goal of lower costs without impairing quality. The first year reductions
in spending were quite modest and not achieved by many of the ACOs, and
the second year savings were only one-third of the first year,
questioning whether savings could be sustained. Also a portion of the
savings was returned as shared savings rewards, plus the calculated
savings did not include the offset of investment of time and money by
the health care organizations. A savings for Medicare does not
necessarily equate with a savings in health care spending.
The mechanisms of the savings are not clear. With the successful Pioneer
ACOs there were fewer hospitalizations and fewer physician visits, but
this could represent the fact that the Pioneer organizations were caring
for healthier patients. Also it is not clear if the ACOs were truly
effective in reducing unnecessary physician visits and hospitalizations,
or if they were denying beneficial health care services because of
incentives provided for reducing spending.
The JAMA authors write, "Reducing Medicare spending through the Pioneer
ACO model, then, likely depends on an array of market, organizational,
programmatic, and physician-related factors that should be better
understood in future implementation and research." So we do not know
what we are doing, yet HHS is going to shove us into an ill-defined and
unproven program which will determine 50 percent of Medicare payments in
less than three years from now. And doctors thought SGR was bad!
at 4:23 PM