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Why Dartmouth Ditched the Pioneer ACO Program

October 28, 2015

Unsurprisingly, the defection was prompted by financial concerns, but Dartmouth is "cautiously optimistic" about CMS's Next Generation model, which will provide pre-determined financial benchmarks that should make it easier to manage successfully.

The institution that regards itself as the "intellectual birthplace of the ACO concept" has abandoned the nation's premier model of the concept.

Dartmouth-Hitchcock Health System in Lebanon, NH, is a long-time proponent of population health and accountable care efforts, but the organization announced last month that its participation in the Centers for Medicare & Medicaid Services' Pioneer Accountable Care Organization model has ended.

Unsurprisingly, the DH's defection was prompted by financial concerns, the same issue that has prompted other organizations to abandon the Pioneer program since it launched in January 2012. The program launched with 32 ACOs; today there are 18 left.

"This was a decision that we did not make lightly," says Robert A. Greene, MD, DH's executive vice president and chief population health management officer.

Robert A. Greene, MD

"Dartmouth was, in some ways, the intellectual birthplace of the ACO concept. Dartmouth-Hitchcock was one of 10 group practices in Medicare's Physician Group Practice demonstration project [in 2005]. We participate in the OneCare Vermont ACO. We were on board in the first year of the Pioneer model. We are big supporters of the ACO concept. We also have very good relationships with CMS and CMMI."

Pioneer ACO is 'Financially Unsustainable'
Despite DH's continuing interest in population health management and value-based care, the organization is opting out of the Pioneer ACO program because it is "financially unsustainable for us," Greene says.

Pioneer ACOs Saved Medicare $118 Million in Year One

DH earned $1 million in shared-savings payments in the Pioneer ACO model's first year, but incurred penalties in 2013 and 2014 of $1.4 million and $3.6 million, respectively.

"The other partners in our original configuration had already signaled that they [couldn't] stand any more risk. They are all smaller hospitals. We would have to go it alone if we stayed in the program, which means our population would have been smaller. If we stayed in for 2015, we would have expected to owe another $3 million to $4 million," Greene says.

"We are producing positive results and doing our best for our patients and our communities. We are delivering high-quality, high-value care and lowering costs every year, but it isn't sustainable within this model."

For example, Greene says, in 2014 DH reduced annual per capita expenditures for its approximately 41,000 attributed lives by 3.9%, which equaled about $16 million in cost savings. Yet, because total care costs were higher than the target set by CMS, the health system had to pay a penalty.

"We still had to write a check. That is a frustration," he says, noting that CMS allowed DH to withdraw retroactively to January 1, 2015, "so it's no harm, no foul for this year."

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