San Diego-Based Sharp HealthCare Pulls Out of Pioneer ACO Program

On Tuesday, San Diego-based Sharp HealthCare announced that it has dropped out of the Pioneer Accountable Care Organization program, making it the 10th ACO to do so, Modern Healthcare reports (Herman, Modern Healthcare, 8/26).

Background on Pioneer ACO Program

The Pioneer program is one of the Affordable Care Act's signature initiatives aimed at producing better care at a lower cost.

Under the Pioneer program, which launched in January 2012, participating providers contract with CMS to meet quality targets and assume new risk when caring for a set population of Medicare beneficiaries.

All 32 ACOs in the program improved the quality of patient care in the first year of the program, but only about one-third lowered costs by enough to generate shared savings, according to data released in 2013.

In July 2013, nine ACOs pulled out of the Pioneer program -- including two in California:

• HealthCare Partners ACO California; and
• PrimeCare (California Healthline, 7/19/13).

Details of the Sharp Announcement

The five-hospital system's ACO, which covers 28,000 Medicare beneficiaries, announced its plan to quit the program in its third-quarter financial statement released Tuesday. The company notified CMS of its decision on June 20.

Alison Fleury, CEO of Sharp's ACO, said the system broke even during the first two years of the program and reduced readmission rates while improving its quality metrics. Sharp also was on track to meet quality benchmarks and was not at risk of losing its Medicare funding, according to Fleury.

She attributed Sharp's decision to drop out mostly to the financial model of Pioneer ACOs, saying, "Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance."

She said from 2012 to now, San Diego's area wage index increased by 8.2%, but because the Pioneer model does not take that into account, health systems have not received amplified regional payments.

Fleury added that CMS understands there is an issue and that she expects the agency will make changes to the 2015 model, such as incorporating regional criteria among these things (Modern Healthcare, 8/26).