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August 27, 2014

Hasan: Why yet another Pioneer ACO is dropping out

Daily Briefing

The Daily Briefing spoke with Hamza Hasan about why a tenth Pioneer ACO has decided to jump ship and what it says about how executives are viewing risk.

Q: Why is yet another Pioneer ACO dropping out?

Hasan: One major issue that Sharp raised in Modern Healthcare's article—and that we've been hearing from other organizations—relates to how the ACO program's finances are structured. Namely, the wage index for Medicare’s Pioneer programs are based on national rates, while Pioneer participants see higher rates of growth in their local markets.

From today's Daily Briefing: 10 of 32 Pioneer ACOs have now dropped out

Q: Beyond issues with the wage index, are there other factors to be aware of?

Hasan: When we've spoken with leaders of Pioneer ACOs, we've heard that patient churn and the network leakage issue as something they have really struggled with. And as it relates to choosing between the Medicare Shared Savings Program (MSSP) and Medicare Advantage (MA), they have found that patient churn and network leakage tends to be a lot lower in MA than MSSP.

We see Sharp, and other care management pioneers, more likely to focus on risk contracts that will give them a greater ability to negotiate benefit design and patient attribution than in MSSP.

Q: Is this push to enter into the MA market widespread?

Hasan: Our sample size is low, but a significant number of the MSSP participants we talked to are considering entering MA, either by partnering with a health plan or in some cases, buying one.

We’ll be addressing the strategic calculus of whether to choose the MSSP program or to take on Medicare Advantage, along with other key contracting elements, in our Health Care Advisory Board national meeting

I also think this blog post by my colleague Lisa Bielamowicz is applicable here—it examines why leading care managers are struggling to gain an ROI. Even those institutions staying in MSSP are struggling with it, given unfavorable contracting terms and several other reasons that Lisa lays out.

Hear our latest thinking on ACOs

Join Hamza, Lisa, Chas Roades and other experts at the meeting of the year for health care executives. We'll be presenting new research on identifying the services, contracts, and partners needed to secure growth in a health care marketplace transformed by increased choice and competition.


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