Risk was too great

Some Pi­o­neers were un­able to hit sav­ings tar­gets

Modern Healthcare - - COVER STORY - Me­lanie Evans

Meet­ing cost-sav­ing tar­gets and earn­ing a bonus un­der Medi­care’s Pi­o­neer ac­count­able care ex­per­i­ment eluded more than a dozen par­tic­i­pants in the pro­gram, and the risk of fu­ture losses prompted some to race for the exit.

For some Pi­o­neers, in­clud­ing Texas-based Plus and Al­bu­querque-based Pres­by­te­rian Health­care Ser­vices, the de­ci­sion to leave grew out of what their ex­ec­u­tives called bad tim­ing or limited op­por­tu­ni­ties to score sav­ings be­cause of Medi­care’s for­mula for award­ing ACO shared-sav­ings bonuses.

Texas Health Re­sources, which owns 13 Texas and North Texas Spe­cialty

hos­pi­tals, Physi­cians, which jointly formed an ACO called Plus, said last week that their Medi­care ACO ef­fort would not con­tinue un­less “we can find an eco­nom­i­cally vi­able way to do so.” The or­ga­ni­za­tion will con­tinue to pur­sue com­mer­cial ACO con­tracts.

Plus was one of 14 Pi­o­neer or­ga­ni­za­tions that ended the pro­gram’s first year last De­cem­ber with­out meet­ing Medi­care’s cost­sav­ing tar­get, a key re­quire­ment for earn­ing a shared-sav­ings bonus.

Wen­dell Wat­son, a spokesman for Texas Health Re­sources, said Plus’ de­ci­sion to leave the pro­gram was driven by the height­ened fi­nan­cial risk that Pi­o­neer ACOs faced at the start of this year. Pi­o­neers agreed to con­tracts that in­crease their fi­nan­cial gains and risks with each year. The three-year con­tracts may be ex­tended for two years, based on per­for­mance.

Based on med­i­cal spend­ing this year so far, the Plus ACO, which had 41,000 ben­e­fi­cia­ries, would owe Medi­care $6 mil­lion to $9 mil­lion by De­cem­ber. With a July 15 dead­line to de­cide whether to drop out, Plus lead­ers de­cided the risk was too great to wait and see if sav­ings would emerge later in the year as pro­jected, Wat­son said.

Dur­ing the first year, Plus did not save money but had a con­tract that pro­tected the or­ga­ni­za­tion from any losses for the first year. That was one of five Pi­o­neer con­tract op­tions, which was se­lected by 16 ACOs.

Wat­son said Plus strug­gled to get timely claims data from the CMS to mon­i­tor qual­ity and costs. An­other dif­fi­culty, he said, was co­or­di­nat­ing care for Medi­care pa­tients who sought care out­side the ACO’s net­work, a com­plaint made by other ACOs as well.

Medi­care ben­e­fi­cia­ries par­tic­i­pat­ing in both the Pi­o­neer and Shared Sav­ings Pro­gram ACOs are al­lowed to seek care from other hos­pi­tals or doc­tors, but the ACOs still are mea­sured on pa­tients’ to­tal costs and the over­all qual­ity of their care.

Un­like six of the Pi­o­neers that did not earn sav­ings pay­outs and are ex­it­ing the Pi­o­neer pro­gram, the spon­sors of Plus will not en­ter Medi­care’s al­ter­na­tive ACO ef­fort, the Shared Sav­ings Pro­gram. The Univer­sity of Michi­gan Health Sys­tem, which did achieve sav­ings, is mov­ing over.

Sim­i­larly, Pres­by­te­rian Health­care Ser­vices is drop­ping out en­tirely from Medi­care ac­count­able care. It strug­gled to earn sav­ings un­der its Pi­o­neer ACO, which had 15,000 ben­e­fi­cia­ries, be­cause lo­cal health­care uti­liza­tion al­ready was low, mak­ing fur­ther re­duc­tions dif­fi­cult, said Todd Sand­man, Pres­by­te­rian’s vice pres­i­dent of strat­egy and cus­tomer en­gage­ment.

In ad­di­tion, he said, Pi­o­neer sav­ings are cal­cu­lated in part by a for­mula that in­cludes the growth rate for a national sam­ple of Medi­care pa­tients. Spend­ing for that national sam­ple slowed this year, mak­ing sav­ings even more dif­fi­cult to earn, Sand­man said.

With those chal­lenges, “we were not will­ing to as­sume that fi­nan­cial risk,” Sand­man said.

But five of the Pi­o­neer ACOs that in­curred a loss de­cided to stick with Pi­o­neer. Atrius Health is one Pi­o­neer ACO spon­sor that will con­tinue in the ini­tia­tive de­spite fac­ing the prospect of pay­ing Medi­care back $2 mil­lion.

Dr. Gene Lind­sey, Atrius’ pres­i­dent and CEO, said he be­lieves the fi­nan­cial hit from the first year of the pro­gram will be tem­po­rary. Dur­ing the next few years, he said, Atrius’ ef­forts to im­prove qual­ity and lower cost will de­liver Medi­care shared sav­ings that off­set the first-year loss as well as cov­er­ing the costs of launch­ing the ACO pro­gram.

“Our ob­jec­tives were not to do well in a par­tic­u­lar fi­nan­cial cy­cle,” Lind­sey said. “We be­lieve the pay­off is go­ing to be the ac­cu­mu­lated clin­i­cal trans­for­ma­tion.”

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