Briefs & Reports

Pioneer ACO Model – First Year Results

In the December 2011 edition of The Michigan Update, we reported that US Health and Human Services (HHS) Secretary Kathleen Sebelius announced the names of 32 health care organizations from across the country to participate in a new Pioneer Accountable Care Organization (ACO) initiative made possible by the Affordable Care Act. Three of those organizations are in Michigan. On July 16, 2013, HHS announced some of the results from the initiative’s first year, including the fact that some of the ACOs would not be continuing in the program. One of the ACOs dropping out of the program is operated by the University of Michigan Health System (U-M).

The U-M ACO is a partnership between U-M and IHA Health Services Corporation, an Ann Arbor-based healthcare provider group, and includes U-M’s Faculty Group Practice. The other two Pioneer ACOs in the state, which will both continue in the program, are Genesys PHO (Physician Hospital Organization), a collaboration between Genesys Health System and several hundred primary care and specialty physicians, and Michigan Pioneer ACO, a partnership of the Detroit Medical Center (DMC) and its physicians, which is managed by the DMC PHO.

HHS stated that all 32 Pioneer ACOs delivered good results on quality measures and earned incentive payments during their first year. The ACOs were successful in lowering readmission rates and in improving both blood pressure control and cholesterol control for Medicare participants with diabetes. The costs for the more than 669,000 Medicare beneficiaries aligned to Pioneer ACOs grew by only 0.3 percent in 2012 while costs for similar Medicare beneficiaries grew by 0.8 percent in the same period. Thirteen of the 32 Pioneer ACOs produced shared savings with HHS, generating a gross savings of $87.6 million in 2012 and $33 million in savings to the Medicare program. Seven of the ACOs did not achieve the required savings and will be shifting to the Medicare Shared Savings Program model, including the U-M ACO. The Shared Savings Program is also an ACO model but with less financial risk for providers. Two other health care organizations will leave the program entirely.

According to the U-M, its Pioneer ACO, which covers 23,000 Medicare beneficiaries, realized a 0.3 percent savings in 2012. The U-M ACO’s medical director, Dr. Tim Peterson, said the decision to withdraw from the Pioneer program was not a financial one but based on a desire to simplify the ACO’s administrative structure, and he said patients served by U-M will not see any change in services as the organization transitions to a more standard type of ACO. Genesys PHO reported that the program essentially broke even in 2012 but expects savings in 2013, and DMC released a statement saying its Michigan Pioneer ACO reduced costs of treating Medicare beneficiaries in its program by 4.5 percent in 2012.

For more information, contact Esther Reagan, Senior Consultant, at (517) 482-9236.