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Will More Pioneer ACOs Defect?

Cheryl Clark, for HealthLeaders Media, September 2, 2014

A lack of financial viability, cited by some organizations as a reason for abandoning the program, does not surprise one longtime critic of the federal accountable care organization program.

Sharp HealthCare's withdrawal from the Centers for Medicare & Medicaid Services' Pioneer ACO program, brings the number of defecting organizations to 10 out of the original 32 and raises questions about how many of the other 22 will remain in the program.

A CMS spokeswoman said in an e-mail late Friday that the agency is not ready to release information about who remains in the Pioneer program.

San Diego-based Sharp said in a statement that its decision to withdraw was based on the Pioneer model's "financially detrimental," formula. Although the five-hospital organization had reduced hospital readmissions, as well as hospital and skilled nursing facility utilization among its 28,000 attributed beneficiaries, the financial performance was just "breakeven."

Alison Fleury, Sharp ACO's CEO, said in a statement that "The Pioneer financial model is based on national financial trend factors that are not adjusted for specific, often unrelated, rate implications that an ACO is facing in a particular region (e.g., San Diego). As a result, the financial impact can be detrimental to the ACO despite favorable underlying utilization and quality performance."

CMS's Center for Medicare and Medicaid Innovation is said to be working on adjustments in 2015. Sharp supports that effort, Fleury said. "It would not be prudent for us to place our ACO at financial risk in 2014 as we wait for these changes to be implemented."

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2 comments on "Will More Pioneer ACOs Defect?"


S Daniels (9/4/2014 at 8:22 AM)
Hospital have been unable or unwilling to influence physician resource utilization and modify practice habits to reduce wasteful, excessive, or possibly even harmful interventions. How did Sharp think costs would come down if physicians are going to continue to practice as before? It reminds me of the transition from CBR to PPS...everyone thought that costs would come down as LOS decreased and that's precisely what did NOT happen. Physicians simply consumed the same amount of resources in fewer days. Until physicians are held accountable for providing the right care in the right place at the right time, every time, costs will not substantially decrease.

J Kuriyan (9/2/2014 at 2:04 PM)
It's the lack of metrics for measuring performance that will drive away the sensible Provider groups from the CMS sponsored ACOs. Without such metrics, ACOs are trusting their financial future in CMS's mysterious black box of rules. As we have seen with the other CMS pay for performance programs that have failed in prior years, the rules are arbitrary and there are no explanations as to why providers did not meet the set goals. Without feedback all such programs are doomed to fail. For ACOs to thrive CMS must have very specific and transparent rules of performance. Only then can providers use the trial period to determine if they are able to perform to those standards. Otherwise it's a huge risk.