Study explores the reform wilderness of Pioneer ACOs

Performance of provider organizations enrolled in the Medicare Pioneer accountable care organization (ACO) program differed significantly in 2012, the program’s first year. In order to sustain or expand the program, according to a study published in the New England Journal of Medicine, researchers believe it may be necessary to require “greater and more reliable rewards for ACOs that reduce spending than those currently in place.” Additionally, the performance differences of organizations with high pre-enrollment spending and those with low pre-enrollment spending indicate that benchmarks for ACOs should be better tailored to the efficiencies of particular organizations.


Under Section 3021, the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148), authorized the creation of ACOs for Medicare in order to incentivize the formation of legal entities, compromised of multiple health care providers, who work together to coordinate care and keep costs down. Under the Pioneer model, “ACOs share in savings with Medicare if spending for an attributed patient population falls sufficiently below a financial benchmark and incur losses if spending sufficiently exceeds the benchmark.”


To evaluate the performance of ACOs in the Medicare Pioneer ACO program, the study reviewed Medicare claims data between 2009 and 2012. The study compared the performance of Medicare fee-for-service organizations with the 32 Medicare Pioneer ACOs. Specifically, for the year 2012, the study evaluated differences in spending and quality between traditional Medicare providers and the Pioneer ACO’s. Researchers also used data prior to 2012 to look into differences between the performances of organizations that had high spending prior to enrolling in the Pioneer program and organizations with relatively low spending prior to their participation in the Pioneer program.


The study estimated savings by ACOs in spending on acute inpatient care, hospital outpatient care, and post-acute care, particularly in skilled nursing facilities. However, the researchers also identified that “spending on outpatient care in office settings differentially increased in 2012 for the ACO group, partially offsetting the lower spending on hospital outpatient care.” Savings were greater for ACOs with baseline spending above local averages, while savings were lower for ACOs with pre-program spending below local averages. The study projected an “overall per-beneficiary estimate of -$29.2,” which suggests that the total Medicare spending for 2012 was approximately $118 million lower than expected as a result of the Pioneer program. According to the study, this figure “exceeds the $76 million in bonuses paid by CMS to Pioneer ACOs by $42 million.” Additionally, for the 13 ACOs that withdrew from the Pioneer program, estimated savings were comparable to those of the 19 ACOs that remained in the program.


The findings were consolidated by researchers into three issues pertinent to the future of the Pioneer ACO program: (1) a lack of a relationship between estimated savings and program participation; (2) the appropriation by CMS of savings generated by ACOs and the lack of strong incentives to participate; and (3) the need for more equitable benchmarks that do not unnecessarily favor organizations with higher pre-program spending.