In the courtroom of public opinion, it's been a rough couple of weeks for the Centers for Medicare & Medicaid Services and its ACO model. On the coattails of the Medicare Shared Savings Program results came the similarly mixed and disparate performance of the Pioneer ACOs, introducing more questions about the long-term durability of a model that has now lost close to half of its participants. Right now, there is little evidence as to whether Pioneer ACOs are truly pioneering the way healthcare is being delivered and reimbursed.
Let's look at the interplay of performance and departures. First-year Pioneer results were almost evenly split between those that generated savings and losses. Of the 32 original ACOs, 18 generated savings, with 72 percent earning shared savings based on their results. The remaining ACOs generated losses, and while only one was required to repay CMS, eight of these made early exits from the Pioneer program in the summer of 2013. It's no wonder the program has been deemed financially unfavorable.
These dropouts make second-year results more difficult to evaluate. In year two, a larger proportion of Pioneer ACOs generated savings, but the disparity is likely due to those previously mentioned exits. Of the 23 ACOs remaining, 14 generated savings and 11 of these earned payments. This time, only six participants generated losses, but half of those will owe CMS. The recent exit of four additional ACOs from the program is clearly explained by these results?three generated losses in the second year and some owed payments.
In terms of quality, the Pioneer ACOs performed well in the patient experience measures, such as physician communication. Areas with mixed results were hospital admissions and diabetes management. Interestingly, those that performed well in diabetes management were poor and mediocre financial performers.
So what's the verdict on the Pioneer program? It depends on who you ask. The Pioneer program is working quite well for the ACOs that have earned bonus payments. Eleven organizations earned a total of $68 million in year two, with most adding to the incentives they collected in year one. And while some of the poorer performers improved their year-over-year performance, most?like Elvis?have now left the building. Today, the Pioneer program has retained barely 60 percent its original members. If others follow suit, CMS will be left with a program that is either too small to succeed or that has been refined to a group of providers that really know how to manage the Medicare fee-for-service population.