In the world of healthcare reimbursement news, July 16, 2013, was a pretty big day. For months, there was speculation about how the accountable care organizations serving Medicare beneficiaries would perform. When the news finally arrived, some called it mixed, but I'd definitely give the joint performance of the 32 Pioneer ACOs at least a C+ or better.

On the financial front, 13 of the 32 produced enough savings for the program that they will receive a combined $76 million from the federal government. They generated a gross savings of $87.6 million in 2012 and saved the Medicare Trust Fund nearly $33 million. Two Pioneer ACOs reported shared losses of approximately $4 million.

On the quality front, all 32 successfully reported quality measures, and they performed better than published rates in fee-for-service Medicare for all 15 clinical quality measures for which comparable data is available.

A big factor in reducing costs was reducing hospital readmissions. Twenty-five of the 32 had lower hospital readmission rates for their attributed beneficiaries than the benchmark rate for the FFS Medicare population. Hospital costs are at least 30 percent of the total medical spend by payers, and Medicare patients are notoriously high users of inpatient facilities.

So with $76 million going to 13 organizations, should Lexus dealers in Boston and San Diego get ready for an influx of dollars. Not exactly. The per-physician bonus is likely to be low maybe only $5,000 or so but keep in mind that many of the physicians participating in Pioneer ACOs are in multiple risk-sharing contracts, mostly with commercial payers such as Blue Cross Blue Shield plans, Aetna and Cigna. Multiply $5,000 or even $2,700 by five and you may have enough to make up for the administrative burden of being part of an ACO and for the decreased volume from a smaller patient load.

Besides, most physicians who are part of ACOs are motivated by the structural changes that are allowing them to provide better patient care, said Christopher Murphy, spokesman for Boston-based Steward Health Care System, a Pioneer ACO that is among the 13 earning shared savings. What this [ACO system] does is gives the physician the chance to spend 30 minutes with a patient. He said 90 percent of the volume coming to Steward-affiliated physicians from commercially insured patients is through risk-sharing contracts.

While a full list of the 13 money-sharing ACOs is not available, it's a safe bet that most of them are in pockets of the country where risk-sharing between payers and providers is common. Those areas include California, Massachusetts and New York, as well as markets such as Phoenix, where Banner Health is an avid risk taker for commercial and Medicare patients.

Meanwhile, the Pioneer ACO program enters a new phase, with nine fewer participants, seven of whom are switching to the Medicare Shared Savings Program, which doesn't require participants to share in losses, as the Pioneer program does. The remaining two are leaving the program altogether.

All in all, the first year's report card is not enough to merit a free doughnut from Krispy Kreme, as the restaurant chain here in the South does for straight A's, but it's certainly good enough for a sigh of relief.

Follow the ins and outs of healthcare reform on this Twitter account:

DRG becomes Clarivate

View Now