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First-Year Results of Massachusetts Pioneer ACOs

Shannon Crowley, CPA, MSA Manager
In May of 2012 BlumShapiro wrote an article on the five Massachusetts organizations that were selected to participate in the Pioneer Accountable Care Organization (ACO) Model (the Model): Atrius Health Services, Beth Israel Deaconess Physician Organization, Mount Auburn Cambridge Independent Practice Association, Partners Healthcare and Steward Health Care System. The Model is part of the Affordable Care Acts efforts to test the impact of several innovative payment arrangements. As we move toward ACOs and the Affordable Care Act, healthcare organizations should keep a close eye on this Model and its results. The Model affects many different groups of people and organizations, including an estimated 200,000 or more Medicare patients in Massachusetts. The program started January 1, 2012 with 32 participating ACOs across the country. The first year of this program has now officially ended and the results are in.

Background
The ultimate goal of the Model is to improve patient care while reducing cost. The Model hopes to achieve this goal by adding a financial risk to the ACOs and realigning payment incentives (from payments being based on volume of procedures to payments being based on better managed patient care). During the first year, the Centers for Medicare and Medicaid Services (CMS) established a budget for each of the ACOs. The budget is based on the costs to the ACO for caring for each Medicare patient over the past three years plus estimated inflation. If the ACO was able to reduce certain Medicare costs by more than the budgeted amount by providing higher quality care, the ACO shared a portion of the savings with CMS.

First Year Results

CMS issued a press release on July 16, 2013 with the results of the first year. Costs for more than 669,000 beneficiaries aligned to Pioneer ACOs grew by only 0.3% in 2012, whereas costs for similar beneficiaries aligned with non-ACO providers grew by 0.8% in the same period. 13 out of 32 Pioneer ACOs produced shared savings with CMS, generating a gross savings of $87.6M in 2012 and savings of nearly $33M to the Medicare Trust Funds. Program savings were driven, in part, by reductions that ACOs generated in hospital admissions and readmissions.

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25 of 32 Pioneer ACOs generated lower risk-adjusted readmission rates than the benchmark rate for all Medicare fee-for-service beneficiaries. Seven of the Pioneer ACOs that did not produce savings have notified CMS that they intend to apply to the Medicare Shared Savings Program (another ACO Model that does not penalize the ACO if they spend more than Medicare projects) and another two ACOs have left the program. Four of the Massachusetts Pioneer ACOs, Beth Israel Deaconess Physician Organization, Mount Auburn Cambridge Independent Practice Association, Partners Healthcare and Steward Health Care System, were able to reduce their Medicare costs by more than the budgeted amount and therefore, shared the savings with CMS. Atrius Health Services was 2.1% over their budget, which will result in a penalty to be paid to CMS. All five have decided to remain in the Pioneer ACO Model program for the second year.

At this point it is still difficult to estimate the total overall impact of the Model. The first year results have been promising, in particular for Massachusetts, and have provided more opportunities for learning and improvement. As mentioned previously, all healthcare organizations (regardless of participation) should begin to evaluate how this potential Model is going to affect their organization and their relationship with other healthcare organizations.

Blum, Shapiro & Company, P.C.

An independent Member of Baker Tilly International