What is an ACO?
Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to provide coordinated high quality care to the Medicare patients they serve. Coordinated care helps ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it shares in the savings it achieves for the Medicare program.
How is an ACO different from Medicare Advantage (MA)?
A Medicare Advantage plan is another way for a Medicare beneficiary to get Medicare coverage, namely through a private insurer that has been approved by Medicare. ACOs, on the other hand, are groups of providers that serve Original Medicare beneficiaries.
All of CMS’ ACO models are part of the Original Medicare Program and follow Original Medicare rules and processes, and ACO beneficiaries have freedom of choice to go to Original Medicare providers.
Beneficiaries aligned to ACOs maintain Original Medicare benefits. For example, there is beneficiary freedom of choice of provider, as opposed to the defined provider network of an MA plan. There is no requirement that a beneficiary receives services from an ACO, nor is there additional premium paid by the beneficiary for being in an ACO. Beneficiaries may receive a reward for receiving the majority of their care from ACO providers, but are not penalized in any way for seeing non-ACO providers. ACOs do not require beneficiary enrollment. Beneficiaries are aligned to ACOs through claims, which voluntary alignment supplements by allowing beneficiaries to confirm a care relationship with an ACO provider.
What was the Pioneer ACO Model?
The Pioneer ACO Model was an initiative launched by the Centers for Medicare & Medicaid Services (CMS) Innovation Center in 2012 that was designed to: 1) show how particular ACO payment arrangements could best improve care and generate savings for Medicare; and 2) test alternative program designs that informed rulemaking for the Medicare Shared Savings Program. This model was designed for organizations that had experience operating as ACOs or in similar arrangements. The Model had a number of unique features, including that ACOs successful in achieving shared savings within the first two years had the opportunity to move into a population-based payment in the third year. Additionally, the Pioneer Model required participating ACOs to engage in similar arrangements with commercial and other payers.
The Pioneer ACO Model was separate and distinct from the Medicare Shared Savings Program and other ACO initiatives.
How was the Pioneer ACO Model different from the Shared Savings Program?
The Pioneer ACO Model differed from the Medicare Shared Savings Program in some of the following ways:
- The first two years of the Pioneer ACO Model were a shared savings payment arrangement with higher levels of savings and risk than in the Shared Savings Program.
- In year three of the program, those Pioneer ACOs that elected to and showed savings over the first two years were eligible to move to a population-based payment model. Population-based payment is a per-beneficiary per month payment amount intended to replace some or all of the ACO’s fee-for-service (FFS) payments with a prospective monthly payment.
- Pioneer ACOs were encouraged to negotiate similar outcomes-based payment arrangements with other payers by the end of the second year, and fully commit their business and care models to offering seamless, high quality care.
- Pioneer ACOs were generally responsible for the care of at least 15,000 aligned beneficiaries (5,000 for rural ACOs).
What were population-based payments?
Population-based payments were per-beneficiary per-month payments intended to replace a portion of the ACO’s fee-for-service (FFS) payments with prospective payments.
Could an ACO have participated in both the Shared Savings Program and the Pioneer ACO Model?
No. ACOs that participated in the Pioneer ACO Model were not permitted to simultaneously participate in the Shared Savings Program.
How does the Next Generation ACO Model differ from the Pioneer ACO Model?
The first performance year of the Pioneer ACO Model began on January 1, 2012. The initial agreement lasted for three years. CMS and ACOs then had the option of extending their agreement for an additional two years based on the performance of the ACO and the ACO’s preference for a total of five performance years (CY 2012 through CY 2016).
In December 2011, CMS signed agreements with 32 organizations to participate in the Pioneer ACO Model. On December 31, 2016, there were 8 Pioneer ACOs that had participated in the fifth and final performance year (CY2016) of the model.
How many applications did CMS receive for the Pioneer ACO Model?
CMS was pleased by the response from the healthcare industry on the Pioneer Model. In total, CMS received over 160 Letters of Intent and more than 80 applications to the Pioneer ACO Model.
How did CMS select the ACOs that participated in the Pioneer ACO Model?
CMS conducted a competitive application process to select the participants that were in the Pioneer ACO Model. CMS released a Request for Applications (RFA) in May 2011 that detailed selection criteria. Applicants were required to submit both a Letter of Intent and Application. Applications were reviewed by a panel of experts from the Department of Health and Human Services as well as from external organizations, with expertise in the areas of provider payment policy, care improvement and coordination, primary care, and care of vulnerable populations. These panels assessed the applications based on the criteria detailed in the RFA. Applicants with the highest scores were invited to participate in interviews with Innovation Center leadership. Based on those interviews, CMS chose a pool of finalists. The Pioneer ACOs announced in December of 2011 were the finalists that chose to sign a participation agreement with CMS.
How did payments to the Pioneer ACOs work?
For the first two years of the Pioneer ACO Model, ACOs followed a “shared savings and losses” model, under which they shared savings or losses experienced by Medicare for a specific set of beneficiaries. To track the savings to Medicare, the Innovation Center developed an expenditure “benchmark” for the beneficiaries that were aligned to the ACO. This benchmark was adjusted based on a combination of the average growth percentage for a reference population and the absolute dollar growth for that reference population. Participating ACOs were rewarded with a portion of the savings or held accountable for a portion of the losses relative to this benchmark. The per capita expenditure had to exceed a threshold of at least 1 percent to trigger savings or losses.
In the third year, Pioneer ACOs that met program requirements could transition into a population-based payment arrangement. This new arrangement provided flexibility for participating ACOs to utilize services not normally reimbursable under Medicare (such as phone consultations or telehealth services) and/or enter into alternative payment arrangements with their participating providers/suppliers.
How does the Pioneer ACO Model differ from the Next Generation ACO Model?
CMS is currently pursuing partnerships through several other ACO initiatives, including the Medicare Shared Savings Program (MSSP), the Comprehensive ESRD Care (CEC) Initiative, and the Next Generation ACO Model. The Next Generation ACO Model uses refined benchmarking methods that reward both attainment and improvement in cost containment. The Model also offers a selection of payment mechanisms to enable a graduation from fee-for-service (FFS) reimbursements to all-inclusive population-based payments.
Central to the Next Generation ACO Model are several “benefit enhancement” tools to help ACOs improve engagement with beneficiaries, including:
- Greater access to home visits, telehealth services, and skilled nursing facility services;
- Opportunities to receive a reward payment for receiving certain services from the ACO and certain affiliated providers;
- A process that allows beneficiaries to confirm their care relationship with ACO providers; and
- Greater collaboration between CMS and ACOs to improve communication with beneficiaries about the characteristics and potential benefits of ACOs in relation to their care.
Were beneficiaries required to participate in the Pioneer ACO Model?
Beneficiaries were aligned to the Pioneer ACO Model based on where they received certain medical services in the previous year.
As with all ACOs, beneficiaries that were aligned to a Pioneer ACO maintained complete freedom to visit any healthcare provider accepting Medicare, just as all Medicare beneficiaries participating in original, fee-for-service Medicare do. These beneficiaries did not need a referral to see a specialist outside the ACO. Unlike a managed care arrangement, such as an HMO or a Medicare Advantage plan, a beneficiary aligned to an ACO is allowed to see any healthcare provider accepting Medicare at any time.
Under the Pioneer ACO Model, primary care providers and other healthcare providers made the decision to participate in ACOs, meaning a beneficiary did not need to take proactive actions to receive the benefits offered through an ACO. ACOs, and their participating doctors and hospitals, were required to notify beneficiaries of their participation, ensuring that the beneficiary was aware of the new arrangement, and his or her rights.
Pioneer ACOs offered Medicare beneficiaries the option to confirm their care relationship with specific Pioneer ACO Model providers and suppliers through a process called voluntary alignment. Pioneer ACOs that decided to participate in voluntary alignment sent letters directly to eligible beneficiaries and some provided forms at the point of care with information regarding voluntary alignment and the potential benefit enhancements that were available to beneficiaries aligned to Pioneer ACOs. If a beneficiary was not initially aligned to a Pioneer ACO but wished to receive the enhanced care coordination benefits that the ACO provided, the beneficiary could simply confirm their main doctor or main place of care and was then aligned to that Pioneer ACO.
What were the benefits for beneficiaries that were aligned to a Pioneer ACO Model?
Any patient who has multiple doctors probably understands the frustration of fragmented and disconnected care: lost or unavailable medical charts, duplicated medical procedures, or having to share the same information over and over with different doctors.
The Pioneer ACO Model was designed to lift this burden from patients, while improving the partnership between patients and doctors in making health care decisions. Beneficiaries that were aligned to a Pioneer ACO had better control over their health care, and their doctors were able to provide better care because they had better information about their patients’ medical history and could communicate more readily with their patient’s other doctors.