Checking in on ACA Care Models: Where ACOs and PCMHs Stand

In recent years, some health care experts and lawmakers pushed for transitioning away from the U.S. health care system’s traditional fee-for-service model to newer, more innovative payment models that focus on prevention and improving the quality of care while reducing costs.

The Affordable Care Act sought to make that transition a reality in part by allocating $10 billion over 10 years to the Center for Medicare and Medicaid Innovation, which is tasked with developing and testing new health care delivery models.

Two of the center’s innovation models — accountable care organizations and patient-centered medical homes — were championed as ways to better serve patients and curb the nation’s health care costs.

This edition of “Road to Reform” examines whether ACOs and PCMHs are delivering on care quality and cost measures more than four years after the ACA’s passage.

Checking In on ACOs

In 2012, CMS launched two ACO programs:

  • The Medicare Shared Savings Program, which aims to improve care quality and lower spending by promoting coordination among eligible health care providers, hospitals and medical suppliers; and
  • The Pioneer ACO model, which offers providers an incentive to meet quality targets, such as preventing hospital readmissions, and requires them to assume responsibility for caring for an assigned population of Medicare beneficiaries.

After the first year of the Pioneer ACO program, all 32 participants were able to improve the quality of patient care, but only about one-third were able to reduce costs enough to generate shared savings, according to CMS data.

In January 2014, CMS released updated data for the Pioneer Program showing that nine participants had generated significant cost savings, totaling $147 million in the first year, without sacrificing care quality. However, the data also revealed that nine Pioneer ACO participants had withdrawn or transferred to MSSP, with some citing financial concerns. For example, the University of Michigan Health System in a July 2013 release announced its decision to transition to MSSP, citing differences in the way the programs measure quality and cost of care as a reason for the switch.

Just last week, San Diego-based Sharp HealthCare announced that it would drop out of the Pioneer program, citing the program’s financial model. Sharp HealthCare is the 10th participant to exit the program, meaning that just 22 of the original 32 participants remain.

Alison Fleury, CEO of Sharp’s ACO, told Modern Healthcare that the system broke even during the first two years of the program and lowered hospital readmission rates while improving the quality of care. However, she said, “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, the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance.”

In addition, CMS data showed 54 of the 114 MSSP participants had lower-than-projected costs in their first year. Of those, just 29 produced enough savings to earn significant bonus payments, while the other 60 participants’ spending exceeded their benchmark.

A Brookings Institute blog post — by Larry Kocot, a visiting fellow in the Economic Studies program at the Brookings Institution, and the Brookings Institution’s Engelberg Center for Health Care Reform’s Farzad Mostashari and Ross White — details the challenges several ACO participants faced, including:

  • Collecting and reporting quality measures in an efficient manner;
  • Creating incentives for stakeholders to be engaged and committed to the ACO;
  • Developing IT systems to support clinical transformation;
  • Forming appropriate governance structures; and
  • Interpreting CMS data and reconciling it with their internal data.

According to the blog post, “For these reasons, it is unreasonable to expect a majority of ACOs to be able to satisfy both criteria for shared savings — reducing costs and improving quality — in their first, or perhaps even second or third year.”

Checking in With PCMHs

Patient-centered medical homes typically use a team-based approach that focuses on care coordination, prevention, and increased communication and decision-making between patients and their providers. The focus on increased patient involvement has led many PCMHs to invest in health information technology, such as patient registries and electronic health records.

The federally qualified health center advanced care practice is the innovation center’s main demonstration project. It examines the ability of PCMHs to improve care and reduce costs. According to CMS data, there are nearly 470 participating clinics and health care organizations.

In an interview with California Healthline, Mark Friedberg, senior natural scientist at RAND Corp., clarified that there are many studies being conducted examining various aspects of the medical home concept — including studies of medical home interventions and medical home models, which are related but distinct types of studies that are not directly comparable to each other. He said that reaction to the medical home model so far has been “mixed to positive.”

Friedberg said he has not yet seen a successful example of a medical home intervention (in other words, a pilot intended to help practices achieve medical home models) in a peer-reviewed journal. His own study, published in the Journal of the American Medical Association, questioned the ability of a multipayer medical home intervention to reduce health care spending and improve quality. Similarly, a separate survey published in the journal Health Affairs concluded that few PCMHs have been able to engage patients successfully.

Meanwhile, some insurer-run PCMHs have reported success in both reducing costs and improving quality metrics.

For example, CareFirst BlueCross BlueShield — which runs a four-year-old PCMH initiative in the District of Columbia, Maryland and Northern Virginia — reported that its PCMH helped reduce the length of patient stays at hospitals, as well as overall hospitalizations among participating patients. The insurer reported $130 million in overall savings, or about 3.5%, compared with its estimated spending under the fee-for-service reimbursement system.

Looking Forward

The conflicting data surrounding PCMHs and the withdrawal of nearly one-third of Pioneer ACO participants begs the question: Will these ACA care models ultimately be successful and will there be substantial data to make that assessment?


Some experts say that despite the conflicting data and ongoing studies examining various parts of PCMHs it is premature to try to determine the full benefits of the program or ways to improve them.

Friedberg said it could take a few more years before researchers have a clear picture of what PCMH interventions are most successful and efficient.

Similarly, Amy Cheslock, vice president of payment innovation at WellPoint, during an Alliance for Health Reform briefing earlier this summer said her organization expects to see mixed results while providers and insurers participating in PCMHs tackle major changes in care coordination and delivery. She said, “This isn’t like a light switch where you turn it on and it is universally better.”


Meanwhile, the future and success of the CMS’ two ACO programs have drawn mixed responses from health care experts and participants.

Several Pioneer ACO participants — including CHE Trinity Health, St. Vincent’s Health Partners and Universal American — sent letters to CMS arguing that the program’s rules force ACOs to take on a large amount of risk with little control over the outcome, concerns cited by some of the participants that have exited the program.

However, not all ACO participants have reported such difficulties. Andrew Racine — senior vice president and chief medical officer at Montefiore Medical Center — and Stephen Rosenthal — vice president of network management at Montefiore — in an email to California Healthline described the program as both “exciting” and “revealing.” Racine and Rosenthal expressed confidence in the program and reported no concerns over the 10 Pioneer ACO participants that have withdrawn or transitioned to the MSSP — a program that has attracted the attention of some health care experts.

Mostashri, former National Coordinator for Health IT, told California Healthline that in light of the issues faced by several Pioneer ACO participants, ACOs’ real success or failure will be determined by how MSSP participants fare, not necessarily the Pioneers.

He said, “Valuable lessons can be learned from the Pioneer ACOs, but the real action now is in MSSP,” which has more than 300 participants, including physician-led organizations, that are generating measurable results.

Around the Nation

Here’s what else is making news on the road to reform.

Will the next Medicaid expansion holdout please step forward? Jason Milman in the Washington Post‘s “Wonkblog” predicts that Indiana will be the next state to expand Medicaid under the Affordable Care Act.

Insurers go high tech: Spurred by the Affordable Care Act’s medical-loss ratio requirement, insurers are investing more in health IT tools for cost transparency, data and analytics, Modern Healthcare‘s Beth Kutscher writes.

Meeting the tax crunch: It appears some tax professionals have doubts about the federal and state insurance exchanges ability to get ACA enrollees their 1095-A tax forms out before their Jan. 31, 2015, deadline, the AP/Sacramento Bee‘s Ricardo Alonso-Zaldivar writes.

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