Cassels: Why some Pioneer ACOs are dropping out

Understanding the key lessons to take away

The Daily Briefing's Dan Diamond spoke with Tom Cassels to discuss the breaking story that nearly one-third of the 32 Pioneer Accountable Care Organizations may leave the program, with some hospitals and health systems potentially switching into Medicare's Shared Savings Program. 

Q: There's been a split over how this story is being framed. Bloomberg called the announcement "a potential threat to the Affordable Care Act's ambitious cost-saving goals"; in contrast, CMS suggests that they fully anticipated some Pioneers would leave the program. Can you put the news— and the Pioneer program itself—in context?

Cassels: The ACA’s goals for cost savings are ambitious but only a sliver of the scored savings were attributed to the Pioneer program, so I think we need to keep this announcement in perspective—we’re talking about a subset of a subset of ACOs dropping out of a program that was at the long end of the tail with respect to provisions designed to drive savings.

  • Information Week Healthcare recently referenced Cassels’ perspective on the decision—read more.

Q: A handful of 'poster-boy' health systems declined to apply for the Pioneer program when it was announced, and most of the 32 participants threatened to drop out unless CMS revised certain quality and pay-for-performance measures. (For the most part, CMS didn't.) Was the Pioneer program too ambitious?

Cassels: No, I don’t think anyone believes the Pioneer program is too ambitious.

The high-profile provider organizations that declined to apply, and the folks who are dropping out now, are focused less on the fundamental challenges of operating under risk and more on two program elements they find grating. First, the program’s administrative complexity. Second, the limited upside its financial model presents for even the most successful ACOs.

Q: The Pioneer program launched a few months before the Medicare Shared Savings Program and an entire year before the bundled-payment program. Is this a preview of potential problems for other ACA initiatives, or is it unfair to extrapolate?

Cassels: The DRG system was rolled out decades ago and people are still complaining about its flaws, [so] I would have been shocked if we didn’t see blowback of this nature in the early days of the program.

There will be participants in every program—from the MSSP to bundling to the new Medicare DME competitive bidding program—who will play ball and then pull back; what will be truly instructive is studying the differences between the experiences of these early departures and the participants who meet both their own internal objectives and CMS’ savings objectives over the long term.

Q: You regularly speak with executives at the nation's leading hospitals and health systems. What are you hearing about their attitudes toward the ACA's various pilots? How important are they compared to the payment transformation efforts in the private sector?

Cassels: Increasingly I’m hearing consensus around two points. One, not every hospital can or should be entering the population health space; and two, that "pilots" are proving more distracting than they are accretive.

Instead of dabbling in a number of pilots, smart leaders are working hard defining market strategy to compete for market share of volume—for example, reorienting their non-hospital care sites to build a consumer-oriented ambulatory network—or market share of lives through delegated risk contracts. Once the organization’s strategy is clear, leaders can focus on aligning as many of their contracts with both public and private payers around a common set of incentives.

Q: What do we know now about Medicare's ACOs that we didn't know when the Pioneer program first launched in January 2012?

Cassels: We know that they are less and less enamored of sharing the value they create through shared savings, they are cognizant of the cultural barriers implicit in shifting course from operating as a sick care system to operating as a population health manager, and they are hungry to identify more and more ways to proactively engage patients in their own health and health care. 

These lessons go well beyond the headlines of who’s in and who’s out of individual programs and represent a very healthy tension for all health systems as we move into a more value-conscious health care marketplace.

    Next in the Daily Briefing

    Daily roundup: July 1, 2013

    Read now