Toward Accountable Payment

Addressing providers' questions about the Pioneer ACO Model

by Rob Lazerow

Read our review of the key issues raised during the Center for Medicare and Medicaid Innovation's recent conference call that sought to clarify details of the Pioneer ACO Model.

Yesterday, officials from the Center for Medicare and Medicaid Innovation (CMMI) held a conference call to answer public questions about the new Pioneer ACO Model. Although CMMI officials primarily hosted the call to clarify any potential areas of confusion, they also announced the following extensions to the application deadlines:

  • Letters of intent are now due on Thursday, June 30 (previously Friday, June 10)
  • Applications are now due on Friday, August 19 (previously Monday, July 18)

CMMI officials dedicated the majority of the conference call to addressing providers' questions about the Pioneer ACO Model. Our research team joined yesterday's session and wanted to share the key issues discussed during the conference call with the Medicare Payment Innovation Project participants.  Many thanks to my colleague Sarah O'Hara, Director of our Clinical Integration Project for developing the summary of the conference call presented below.

Providers' questions about the Pioneer ACO Model

Key issues raised by conference call participants included the following:

Q. Will pushing back the letter-of-intent and application deadlines have any impact on the start date for the Pioneer ACO program, or on the ACO's ability to participate in the broader Shared Savings Program if they are not admitted to Pioneer?

A. Even with the later application deadline, organizations should know how they have fared in the Pioneer application process well before the deadline for SSP applications. For organizations accepted to Pioneer, officials said they will ensure there is a "comfortable and constructive" interval between program admission and a start date sometime in the third or fourth quarter of 2011. Officials also recognize that certain aspects of the Pioneer ACO program are contingent on the final SSP rule, which is not expected until later this summer, and noted that organizations have the option to withdraw from the program following publication of the final rule with no penalty until December 31, 2011.

Q. How will the short deadline for Pioneer ACO participation impact applicants who require mandatory antitrust review?

A. CMS will prioritize applications from organizations that do not require a full antitrust review from the Federal Trade Commission or Department of Justice, either because they fall below 50 percent market share or because they were formed prior to March 23, 2010, the date specified within the draft ACO antitrust policy statement.

Q. How will CMS calculate expenditure targets for participants in the Pioneer ACO model?

A. Several questions were asked around this issue. Officials reported that detailed information about how the agency would calculate expenditure baselines and targets would be released within the next month. During the conference call, they re-iterated the high-level description of their trending methodology found in the Pioneer ACO request for applications: ACO expenditure baselines will be based on a weighted average of beneficiary expenditures in the three years prior to program start. This baseline will then be inflated by a hybrid measure based half on the national percentage growth rate for Medicare per capita expenditures and half on the absolute dollar growth rate, and adjusted for demographic characteristics such as age or sex, in order to create a target. Officials stated that this blended measure is deliberately different from the method used in the broader SSP--which proposes to use a measure based completely on percentage growth rate to inflate the benchmark and which has drawn criticism for favoring ACOs in low-cost areas--because the Pioneer ACO program is intended in part to test new models that could be applied to the SSP.

Q. Can newly formed organizations apply for the Pioneer ACO program, or must applicants be established organizational structures?

A. CMS does not have explicit expectations for longevity of the actual applying organization. Rather, regulators will be looking for a history of strong working relationships between participating providers and demonstrated experience with management of populations and financial risk.

Q. Are organizations permitted the flexibility to construct their own payment structures in the Pioneer ACO model?

A. CMMI is strongly encouraging Pioneer ACO applicants to submit suggestions for alternative payment models. Ultimately, however, officials expect to offer a "limited" menu of one or two alternatives (before the participation agreement is signed), in an effort to balance between the desire to give providers flexibility and the need to maintain enough consistency to evaluate program effectiveness.

Q. Pioneer ACOs must have 50 percent of their total reimbursement tied to "outcomes-based contracts" by the end of the second performance year. Does population-based reimbursement (e.g., capitation) count?

A. A population-based contract could be counted toward the 50 percent as long as it includes significant quality and patient experience standards, not just financial risk.

Q. How far back do Pioneer ACO applicants need to document experience with outcomes-based contracts?

A. Recent history (past three to five years) is sufficient.

Q. If a primary care physician (upon whom beneficiary assignment is based) leaves the ACO mid-year and joins another ACO, what happens to his or her patients?

A. Beneficiaries are assigned to the ACO for the entire performance year. As a result, if an individual provider leaves the ACO mid-year, the ACO would still be responsible for outcomes and costs for his or her beneficiaries until the end of that year.

Q. Like the SSP, the Pioneer ACO program is prescriptive as to the composition of ACO governing bodies. What happens if those prescriptions run counter to state law?

A. The program makes an exception for extenuating circumstances such as legal restrictions on board governance. However, the agency will "highly prioritize" organizations that are committed to including Medicare patients and community representatives on their boards.

Q. Can an organization participate in the Pioneer ACO program and also apply to other initiatives that CMMI might roll out in the future?

A. Participation in multiple initiatives is possible (and in fact encouraged), with the caveat that an organization cannot participate in more than one program with a shared-savings component.

Q . Will letters of intent, applications, or lists of applicants for the Pioneer ACO program be made public?

A. Letters of intent and applications will not be made public, as they could contain competitively sensitive data. CMMI officials on the conference call were not certain whether the applicant list could legally be made public.

Read our full analysis of the Pioneer ACO Model

The Health Care Advisory Board recently published a whitepaper exploring the Pioneer ACO Model. Download "The Pioneer ACO Model: Program Details and Implications for Participating Providers" whitepaper to read our complete analysis of Medicare's recently announced Pioneer ACO Model. This whitepaper offers eight key conclusions about the Pioneer ACO Model and details critical aspects of the program's structure.

Is your organization applying to become a Pioneer ACO? As always, please feel free to email me with any questions you may have about the Pioneer ACO Model, Medicare Shared Savings Program, or payment reform more broadly.