• Another Pioneer Leaves The West
  • September 10, 2014 | Author: Eric A. Klein
  • Law Firm: Sheppard, Mullin, Richter & Hampton LLP - Los Angeles Office
  • Another withdrawal from the Medicare Pioneer Accountable Care Organization (ACO) program has occurred. Sharp Healthcare ACO, an affiliate of the Sharp integrated delivery system in San Diego, California, notified the Center for Medicare & Medicaid Innovation (CMMI) at the Centers for Medicare & Medicaid Services of its withdrawal from the Pioneer ACO program in June, but the first published media story regarding the withdrawal occurred last week. Sharp is the tenth Medicare Pioneer ACO to leave the program, joining the ranks of other withdrawing healthcare entities such as University of Michigan, Seton Health Alliance in Texas, DaVita HealthCare Partners and Prime Care. The Pioneer ACO program started initially with 32 participants, so approximately one-third have now exited the program. Some of the withdrawing entities have converted to Medicare Shared Savings Programs (MSSP), while others have entirely left the ACO programs.

    Sharp ACO, which was responsible for approximately 28,000 Medicare patients, will now transition those patients back to traditional Medicare fee for service programs. Sharp ACO was reported by CMMI to only achieve break even financial performance for the first two years of participation, even though Sharp noted that it had achieved meaningful reductions in readmission rates and hospital and skilled nursing utilization. Sharp ACO called out the fact that the Pioneer ACO program was measured based upon national financial trend factors, rather than local factors, as being financially detrimental to Sharp.

    One wonders, when some of the most managed care experienced entities in the country determine that the Pioneer ACO program does not work for them, what message should that send to CMMI as it contemplates further changes to the ACO programs? San Diego now has no remaining Pioneer ACOs, one of the flagship programs under the Affordable Care Act. If the Pioneer ACO program remains important to CMMI, why then is it not taking action to retain some of the industry leaders’ support of the program?

    Given the multiple rounds of MSSP ACO awards in recent years, perhaps the quiet message is that the MSSP ACOs are the main focus for the next few years. The MSSP ACOs are being undertaken by a broad range of healthcare entities in the East, Midwest and South that have have limited experience with managed care and therefore perceived greater upside opportunities over time for healthcare cost improvement as initial shared savings programs are implemented. So, has CMMI shifted toward the low hanging fruit found in traditional fee-for-service states? We look forward with interest to the next round of announcements as to the future of the Pioneer ACO program.