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'Poster Boys' Take A Pass On Pioneer ACO Program

Sep 14, 2011

This story was produced in collaboration with POLITICO Pro.

During the health care debate, the Mayo Clinic, the Cleveland Clinic, Geisinger Health System and Intermountain Healthcare were repeatedly touted as models for a new health care delivery system.

Now, they have something else in common: All four have declined to apply for the “Pioneer” program tailor-made by the Obama administration to reward such organizations.

“When the poster boys ask that the posters be taken down, you have a problem,” says Michael Millenson, president of Health Quality Advisors LLC. The lack of participation, he says, suggests that “somebody messed up": either the government didn’t make the rules appealing enough, or “when push came to shove, the big players didn’t want to play by the rules.”

The four health systems are considered the most promising models for “accountable care organizations,” a new approach to delivering health care services that rewards doctors and hospitals for providing high-quality care to Medicare beneficiaries while keeping costs down. The ACO provision became one of the most highly anticipated elements of the health care overhaul, and providers embarked on a frenzied race to join in as quickly as possible.

But when the proposed regulation for the program was announced in March, excitement fizzled.

Hospital and doctor groups complained that the program created more financial risks than rewards and imposed onerous reporting requirements. The American Medical Group Association, which represents nearly 400 large provider organizations, responded with a letter to CMS warning that more than 90 percent of its members would not participate because of the reporting requirements and financial disincentives. In particular, the proposed rule would impose penalties for ACOs that do not achieve savings.

In response, HHS announced the Pioneer program in May, promising it would “provide a faster path for mature ACOs” like the Mayo Clinic that would allow the high-performing health systems to pocket more of the expected savings in exchange for taking on greater financial risk. HHS estimated that the Pioneer program could save Medicare as much as $430 million over three years.

CMS has been tight-lipped about how many health systems applied for the program and has declined repeated requests for the information by Kaiser Health News. The deadline to apply was Aug. 19.

The Advisory Board Company, a hospital consulting firm, estimates that between 30 and 50 organizations have applied for the Pioneer program, based on informal surveys of clients and conversations with Innovation Center employees, said Chas Roades, Advisory Board’s chief research officer. CMS hoped to have 30 health systems participate in the Pioneer program.

Daron Cowley, a representative for Intermountain, says the health system decided not to apply because “the ACO regulations fell short of the goals that had been set, especially as it pertains to institutions that already are organized to coordinate care.”

Geisinger and some of the other leading organizations decided to remain in the Physician Group Practice Demonstration instead for another two years — continuing an earlier integrated care Medicare pilot that has a similar structure to ACOs and shares many of the same goals.

Jeff Ruggiero, a lawyer at Arnold & Porter and general counsel to the Queens County Medical Society in New York, says others are waiting to see what will be included in the final ACO Shared Savings regulation, expected to be released this month, and may apply to become ACOs under those rules. Others are choosing to form ACOs with private payers rather than Medicare.

Ruggiero says the “lack of clarity is creating some less-than-expected participation in the Pioneer program,” as health systems take a wait-and-see attitude. He adds that with such a timeline, few providers will be able to meet the January 2012 launch of the Shared Savings Program. CMS is “going to have to allow for some kind of rolling participation,” he says.

Susan DeVore, president and CEO of Premier, a performance improvement alliance that has 77 integrated health systems that aspire to become some form of ACOs, says eight member organizations applied for the program. With so many new integrated care models launching, she says, the number isn’t surprising. Members “are not slowing down, backing up or stopping the development of the capabilities to deliver integrated care in their communities,” she says.

Instead, she explains, they are choosing among the many options for forming integrated systems, including the Pioneer and Shared Savings Program, the Physician Group Practice Demonstration, medical homes and arrangements with private payers.

CMS Administrator Don Berwick said this week that he expects CMS will announce the Pioneer ACOs before the Shared Savings program launches in January.

Here is a partial list of applicants, confirmed by Kaiser Health News, for the ACO Pioneer program:

  • Tucson Medical Center in Arizona
  • Monarch HealthCare in Orange County, Calif.
  • Norton Healthcare in Louisville, KY
  • Banner Health (multiple states)
  • Mountain States Health Alliance (multiple states)
  • Fairview Health Services in Minnesota
  • Hackensack University Medical Center in New Jersey
  • Montefiore Medical Center in New York
  • IntegraNet in Houston, Texas
  • HealthCare Partners in California
  • Advocate Health Care in Illinois
  • Crystal Run Healthcare in New York
  • Texas Health Resources
  • Park Nicollet in Minneapolis, Minn.
  • Detroit Medical Center in Michigan
  • Henry Ford Health System in Michigan
  • North Texas Specialty Physicians in Fort Worth, Texas

Christopher Weaver contributed to this report.

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