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Population Health News

32 Pioneer Accountable Care Organizations Save $384 Million

By Jennifer Bresnick

- During their first two years of operation, accountable care organizations participating in the CMS Pioneer ACO Model saved Medicare more than $384 million, says an independent study published in the Journal of the American Medical Association (JAMA).  The savings, equal to approximately $300 per beneficiary per year, were coupled with reports of better care coordination, reduced hospital readmissions, and improved follow-up from primary care providers.

Pioneer Accountable Care Organizations

As one of the first and most closely-watched payment reform structures built on value-based reimbursement, the Pioneer Accountable Care Organization model adds to mounting evidence that savings and care quality improvements can both be achieved through a pay-for-performance reimbursement framework.

“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.”

Accountable care organizations are “one of the centerpieces of the Affordable Care Act, and understanding how they have performed is critical in the United States,” writes Lawrence P. Casalino, MD, PhD, a professor of Healthcare Policy and Research at Weill Cornell Medical College in an editorial accompanying the JAMA study authored by David J. Nyweide, PhD, et al. 

During the first year, spending per beneficiary per month dropped by nearly $36.  In the following year, that drop was an additional $11.18.  Aggregate savings among the 32 Pioneer ACOs were approximately $280 million in 2012 and 105 million the next year.  Inpatient spending showed the largest decreases, while the utilization of physician services, emergency department visits, and post-acute care also declined.

READ MORE: YMCA Diabetes Management Program Saves $1100 per Patient a Year

“This success demonstrates that CMS can design and test innovative payment and service delivery models that produce better outcomes for the Medicare program and beneficiaries,” said Patrick Conway, MD, the acting principal deputy administrator of CMS. “This gives CMS greater confidence in scaling elements of the model to benefit people across the nation, and we are working to determine the best strategies for embedding the lessons we have already learned from the Pioneer Model into permanent Medicare programs and our nation’s health system.”

While the savings are significant, Casalino points out that the program’s first year savings were significantly higher than the second, which may be the start of a downward trend in the ability of healthcare organizations to squeeze excess dollars from the care continuum.   “The Pioneer ACOs produced savings in year 2 that were one-third of year 1 savings,” he says.

“It is possible that during the first year these ACOs were able to 'grasp the low-hanging fruit' - to address relatively easy ways to control costs - and that the savings they generate will be much smaller, at best, in subsequent years. Alternatively, it may be that it will take time for ACOs to develop better processes to improve the care of their patients and that they will be able continue to lower costs for years to come.”

CMS has strongly backed accountable care organizations as the key to achieving system-wide savings, greater efficiencies, and significant gains in patient safety.  Value-based care will become an increasingly integral part of the payment landscape as Congress, HHS, private payers, and the provider community work to meet their financial and care quality goals.

In addition to touting the success of foundational accountable care programs like the Pioneer ACOs and the Medicare Shared Savings Program (MSSP), CMS recently announced the creation of the Next Generation Accountable Care Organization model, which will push healthcare providers into accepting greater risk and theoretically reaping greater rewards.

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“The Next Generation ACO Model is one of many innovative payment and care delivery models developed by the CMS Innovation Center,” Conway said when unveiling the initiative. “These models are designed to set clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers based on the quality, rather than the quantity of care they provide to patients.”

The Next Generation ACO program hopes to ease some of the struggles that have plagued Pioneer ACOs in the past, Casalino adds.  Pioneer ACO participants have truly been trailblazers at the beginning of a new era of accountable care, and the journey hasn’t always been a smooth one.  Next Generation ACOs will rely more heavily on healthcare analytics infrastructure and patient engagement technologies like telehealth and mHealth to raise clinical quality and ensure patient satisfaction.

“CMS is trying to clear the trail by creating the Next Generation ACO program,” Casalino says, by taking into account many of the industry’s suggestions for improvements and changes based on a growing number of experiences in the public and private spheres alike.  “The next 5 years will be critical in determining if ACOs can indeed maintain or improve quality of care at a time when new therapies are emerging and simultaneously control the rise of health care costs.”  


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