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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."

Financial Targets Difficult for Low-Cost Providers
Among the concerns DH has with the Pioneer program, Greene says, is that the financial benchmarks used to determine payments and penalties do not take into account that some health systems are already providing low-cost, high-value care.

Because it is much harder for those systems to repeatedly demonstrate significant financial improvements, he says, CMS should reconsider the Pioneer model's design to recognize that low-cost ACOs are already benefitting Medicare beneficiaries and are less able to generate savings.

"It's like a runner who runs a 12-minute mile [with a goal of running a four-minute mile]. If they want to train and exercise, they can probably get that down to a 10-minute mile. For us, it's harder because we were already running a five-minute mile," Greene says.

"It would be more sustainable if the program was structured a little differently. We are encouraging CMS and CMMI to think differently about how to improve the model because it is much harder for organizations that are running a five-minute mile to work up to running a four-minute mile."

What's Next?
Although DH will no longer be participating in the Pioneer ACO model, Greene says, the organization will continue to benefit from the tools and protocols that have been put into place to facilitate better population health management.


Developing Value-Based Models


"There is a big overhead to running this program. For us, it's a seven-figure number. We are still going to use those investments and run the analytics and do the care coordination that lead to high-quality care," he says.

"We are still going to treat our Medicare beneficiaries with the highest-quality, most efficient care. We are not going to stop doing that because it's the right thing to do."

DH has also been accepted into CMS's Next Generation ACO model, which starts January 1, 2016. Unlike the Pioneer program, Greene says, this new iteration will provide pre-determined financial benchmarks that will make it easier to manage successfully.

"The way CMS set financial targets—what they call benchmarks—for the Pioneer program is a bit of a black box as far as the methodology, but it winds up generating a moving target," he says.

Although some believe the Next Generation model doesn't go far enough, Greene says DH is "cautiously optimistic about the Next Generation model… We are waiting now for CMS to send us the final contract and a target for beneficiaries. Next Gen will provide a prospective target that we can manage to. It won't change. It's hard to manage to a moving target."

Other enhancements in the Next Generation model include the ability to provide more telemedicine services to patients in their homes and to follow-up with home visits when patients are discharged from the hospital.

"There are a number of important changes in the Next Gen model that let us do more for patients," Greene says.

HealthLeaders Media LIVE from Memorial Hermann: A Care Management ACO, will be broadcast on Wednesday, November 11, 2015, from 11:00 to 2:00 p.m. ET. Memorial Hermann reveals its multi-pronged approach for their successful Accountable Care Organization. How physician alignment, patient engagement methodologies, and a focus on community health has propelled them to the top.

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