Pioneer ACOs Save Medicare $384 Million, Aim to Expand

A payment model created under the Affordable Care Act, which has incentivized some health systems to place a greater emphasis on home care, has generated substantial savings to Medicare, a new study reveals.

The Pioneer Accountable Care Organization (ACO) Model generated more than $384 million in savings to Medicare over its first two years, giving the government cause to expand the patient care model to a larger population of Medicare beneficiaries. 

The savings to Medicare, an average of approximately $300 per participating beneficiary per year, were released by the Department of Health and Human Services (HHS) this week.

“The [Office of the Actuary in the Centers for Medicare & Medicaid Services’] certification that expansion of Pioneer ACOs would reduce net Medicare spending, coupled with [HHS] 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,” HHS said Monday in a statement.

Currently, the Pioneer ACO Model is serving more than 600,000 Medicare beneficiaries. However, it is the far smaller of the ACO programs, compared with the Medicare Shared Savings Program. The Pioneer program was designed for health systems that already have experience in coordinating care across settings, in order to achieve cost savings while delivering high-quality outcomes. Participating organizations could receive greater monetary awards but also faced greater risks of penalties than those in the MSSP. Part of the Pioneer expansion could see MSSP participants switching over to the Pioneer model, according to CMS.

One of the 18 ACOs participating in the Pioneer program this calendar year, Arizona-based Banner Health Network, recently reported that it dramatically reduced hospitalizations and cut costs by implementing a telehealth initiative to improve home care for patients with chronic conditions.

Compared to their counterparts in regular fee-for-service or Medicare Advantage plans, Medicare beneficiaries who are in Pioneer ACOs on average report more timely care and better communication with their providers; use inpatient hospital services less and have fewer tests and procedures; and have more follow-up visits from their providers after hospital discharge, according to HHS’ report findings. 

“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,” Burwell said in a statement. “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.”

The positive findings follow a rocky start for the program. By September of last year the program had seen the exit of 13 health systems, which stirred concerns that even sophisticated organizations may be unwilling to take losses while they wait for policymakers to test new payment and healthcare delivery models.

Pioneer ACOs generated Medicare savings of $279.7 million in 2012 and $104.5 million in 2013, data show. To date, actuarial analyses show that ACOs in the Pioneer ACO Model and the Medicare Shared Savings Program have generated over $417 million in total program savings for Medicare.

“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.”

Written by Cassandra Dowell