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'Pioneer ACOs' to encompass 860,000 Medicare patients

Monday December 19, 2011
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The U.S. Department of Health and Human Services on Monday said 32 leading healthcare organizations will participate in Pioneer Accountable Care Organizations, a newly announced type of ACO.

The Pioneer ACO initiative will encourage primary care doctors, specialists, hospitals and other caregivers to provide better, more coordinated care for people with Medicare and could save up to $1.1 billion over five years, according to HHS.

Under this initiative, funded by the Affordable Care Act and operated by the Centers for Medicare & Medicaid Services Innovation Center, Medicare will reward groups of healthcare providers that have formed ACOs based on how well they both improve the health of their Medicare patients and lower their healthcare costs.

"Pioneer ACOs are our leaders in our work to provide better care and reduce healthcare costs," HHS Secretary Kathleen Sebelius said in a news release.

The Pioneer ACO initiative is among several options for providers looking to better coordinate care for patients and use healthcare dollars more wisely. The Pioneer ACO model is designed specifically for groups of providers with experience working together to coordinate care for patients. The Medicare Shared Savings Program and the Advance Payment ACO Model, both announced in October, are also ACO options for providers (see www.cms.gov/aco).

"We know that healthcare providers are at different stages in their work to improve care and reduce costs," Marilyn Tavenner, RN, BSN, MHA, acting administrator of CMS, said in a news release. "That's why we've developed a menu of options for Medicare to meet doctors, hospitals and other healthcare providers where they are, and begin the conversation of how to enhance the care they are offering to people with Medicare."

The 32 Pioneer ACOs underwent a rigorous competitive selection process by the CMS Innovation Center, including extensive review of applications and in-person interviews.

Payment models

In the first two performance years, the Pioneer Model tests a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the Shared Savings Program. These shared savings would be determined through comparisons against an ACO's benchmark, which is based on previous CMS expenditures for the group of patients aligned to the Pioneer ACO.

In year three, those Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model: a per-beneficiary, per-month payment amount intended to replace some or all of the ACO's fee-for-service payments with a prospective monthly payment.

Additionally, during the application process, organizations were invited to propose alternative payment arrangements. CMS established two alternatives to the core payment arrangement cited above based on this input, allowing Pioneer ACOs more flexibility in the speed at which they assume financial risk.

The Pioneer ACO model requires ACOs to engage other payers in similar efforts to reward healthcare providers that deliver high-quality care. The Pioneer ACO model also includes strict beneficiary protections, including the ability for patients to seek care from any Medicare provider they wish.

Other rules

Under the Pioneer ACO Model, CMS will prospectively align beneficiaries to ACOs, allowing care providers to know at the beginning of a performance period for which patients' cost and quality they will be held accountable. Participants generally must have a minimum of 15,000 aligned beneficiaries unless located in a rural area, in which case they must have a minimum of 5,000 beneficiaries. To be aligned, beneficiaries must be enrolled in original, fee-for-service Part A and B Medicare and cannot be participating in Medicare Advantage plans.

By the end of 2012, Pioneer ACOs must attest — and CMS will confirm — that at least 50% of the ACO's primary care providers have met requirements for meaningful use of certified electronic health records for receipt of payments through the Medicare and Medicaid EHR Incentive Programs.

Selected Pioneer ACOs include physician-led organizations and health systems, urban and rural organizations, and organizations in various geographic regions of the country, representing 18 states and the opportunity to improve care for about 860,000 Medicare beneficiaries.

For a list of the 32 organizations in the Pioneer ACO model, visit http://bit.ly/tkuuDa. The first performance period of the Pioneer ACO model begins Jan. 1.

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