OIG: CMS Lacked Good Management Policies for Pioneer ACO Model

June 08, 2016 - The Pioneer Accountable Care Organization (ACO) program faced a number of management and leadership challenges during its early days, according to a report from the Office of the Inspector General (OIG).  The report indicates CMS faced several challenges with implementing the Pioneer model in its first performance year, including a lack of healthcare transparency and improper management of ACO agreements.

Specifically, the OIG reported that CMS did not communicate changes to payment model modifications, verify payment calculations, promptly process and collect shared losses, disclose audit results, and maintain Pioneer ACO agreements and documentation.

The Pioneer ACO model was designed to support more experienced ACOs transition to value-based payment structures. While each participant entered into its own agreement with CMS, all contracts established a cost benchmark and a percentage for shared savings relative to that benchmark.

Four out of the five payment agreements in the first performance year of the model also stipulated a shared loss provision, which was the same percentage as the shared savings, as part of a two-sided risk model.

The OIG was selected to review how CMS managed the new model and make observations about its administration of the program during the first year.  The findings include the following:

CMS did not communicate retroactive payment model changes

The OIG stated that CMS failed to communicate that it transferred five Pioneer ACOs from a two-sided risk model to a one-sided risk structure and retroactively applied the change.

 “While CMS was not required to report specific information, more complete information would have provided a fuller picture of the Pioneer Model in PY1 and provided stakeholders with a more complete understanding of the performance of the five Pioneer ACOs—four of which left the Pioneer Model after PY15—in reducing healthcare costs,” says the report.

CMS had published Pioneer model results for the first year, but it did not detail the potential shared savings and losses for the four ACOs that switched risk models. The OIG found that the shared losses would have totaled $6.8 million under the original payment models.

Instead, the agency released more favorable results from after the transfer, which noted that shared losses were only $4 million.

Payment calculations could not be verified due to lack of data

The OIG also explained that CMS could not verify if shared savings and loss calculations were accurate because the CMS contractor did not have access to the necessary data. The contractor only had access to historical Pioneer Model data to determine payment calculations.

CMS also did not properly review the contractor’s process to ensure that it was following the contract’s terms and properly using the unique payment model methodology that was not standard in the healthcare industry.

“Although CMS performed some validity checks on underlying data, it had not conducted an end-to-end review of shared savings and loss calculations,” noted the report. “The failure to conduct end-to-end testing demonstrates that CMS did not have good management practices over the contractor.”

CMS delayed processing and collecting shared loss

Under Pioneer ACO agreements, CMS must collect shared losses from ACOs within 30 days of the final settlement report date if no payment calculation appeal is issued. However, the OIG found that CMS did not process or collect the only share loss for the first year within the designated timeframe.

The settlement report for one Pioneer ACO was issued on August 1, 2013, which listed a $2.5 million share loss. CMS did not formally report the loss to the Treasury until November 19, 2013 and it did not collect the debt until December 26, 2013.

Two audit results were not disclosed to Pioneer ACOs

In the first year of the program, CMS used a contractor to preform two audits on Pioneer ACO pilots, but it did not report results to the auditees, stated the OIG.

“Although not required to do so, good management controls for monitoring and communications indicate that CMS should have ensured that it documented end-of-audit discussions with each auditee, including providing each auditee with its final audit report and resolving the findings,” reported the OIG.

The contractor found ten noncompliance issues and four deviations from the program’s management practices. For example, the auditors discovered substantial differences between Pioneer ACO provider and supplier lists compared to the official CMS lists. Some Pioneer ACOs also did not document beneficiary choices associated with mental health, substance abuse, and other medical data.

Pioneer ACOs stated that CMS never provided the audit results nor contacted them regarding the audit outcomes. CMS also neglected to share end-of-audit discussion documentation with the OIG.

Pioneer ACO agreements were not properly maintained

The OIG uncovered that CMS did not appropriately manage complete Pioneer ACO agreements and supporting documentation. For example, the OIG received the contracts with missing pages and CMS did not provide the missing amendments upon request.

CMS also did not monitor email accounts for terminated Pioneer Model staff, which resulted in inadequate documentation, stated the report. Since CMS did not use a group account to communicate with the participants, some documentation was inaccessible after an employee had left the agency.

In one case, CMS reportedly lost an email from a participant that requested an optional technical adjustment that would eliminate a shared loss of up to $2 million. After the OIG requested the documentation, CMS was able to recover the email.

In response, CMS explained that it was improved its processes and procedures, such as documentation, with the Pioneer ACO model.

“CMS is committed to the transparency of results, and has made financial and quality performance results for the Pioneer ACOs publicly available on its web site,” wrote Andy Slavitt, Acting Administrator of CMS, to the OIG. “CMS remains committed to leading delivery system reform, with an array of alternative payment models, including the Pioneer ACO Model.”

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