Healthcare Revenue Cycle Management, ICD-10, Claims Reimbursement, Medicare, Medicaid

Policy & Regulation News

Pioneer ACO Model: The Embrace of Population-Based Payments

By Jacqueline DiChiara

- The Department of Health and Human Services (HHS) has released an independent evaluation report revealing an innovative patient care payment model. This model, the Pioneer ACO Model, which stemmed from a pilot project and Affordable Care Act initiatives, generated sizable Medicare savings of $384 million within a two-year period, according to the report.

Pioneer ACO Model

The cost savings implications for Medicare employers and patients are substantial, confirms CMS. $384 million in savings evens out to a $300 annual savings per beneficiary without compromise to the delivery of high-quality patient care.

“This is a crucial milestone in our efforts to build a health care system that delivers better care, spends our health care dollars more wisely, and results in healthier people,” states HHS Secretary Sylvia M. Burwell. “The Pioneer ACO Model has demonstrated that patients can get high quality and coordinated care at the right time, and we can generate savings for Medicare and the health care system at large.”

The results are in. Medicare beneficiaries in Pioneer ACOs report more timely care and stronger communication efforts with providers, have fewer tests and procedures performed, utilize fewer hospital services, and have more provider follow-up visits following hospital discharge, confirms HHS.

The independent Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) confirms the Pioneer ACO Model, which serves over 600,000 Medicare beneficiaries, is an original approach to meeting rigorous expansion criteria involving a larger Medicare beneficiary population.

This model will allow both healthcare organizations and providers with experience in coordinating care for patients across a variety of settings to transition expediently from a shared savings payment model to a population-based payment model. Such initiatives, which function independently from the Medicare Shared Savings Program, provide healthcare payers with increased accountability via incentives in an effort to advance quality and health outcomes while amplifying cost savings throughout the realm of the healthcare industry.

Those physicians and hospitals that establish Pioneer ACOs will be able to split savings generated from Medicare as long as there are firm efforts towards coordinated patient care with a goal of keeping patients happy and healthy, confirms HHS. Specific quality performance standards must be met or exceeded or else physicians and hospitals may be mandated to pay a portion of any losses generated, HHS adds.

A primary objective of the Pioneer ACO model is to decrease expenditures while maximizing quality for fee-for-service Medicare beneficiaries. “In the first 2 years of the Pioneer ACO Model, beneficiaries aligned with Pioneer ACOs, as compared with general Medicare FFS beneficiaries, exhibited smaller increases in total Medicare expenditures and differential reductions in utilization of different health services, with little difference in patient experience,” state David J. Nyweide, PhD, et al, within their valuable research from The Journal of the American Medical Association.

Pioneer ACOs manifested Medicare savings of almost $280 million in 2012 and over $104 million in 2013, according to HHS. Over $417 million in Medicare program savings has been generated to date, reports HHS.

“This success demonstrates that CMS can design and test innovative payment and service delivery models that produce better outcomes for the Medicare program and beneficiaries,” explains Patrick Conway, MD, CMS’ Acting Principal Deputy Administrator.


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