Latest ACO dropout blames issues with payment system

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CEO Alison Fleury
CEO Alison Fleury

A California healthcare system recently became the latest dropout from the Pioneer Accountable Care Organization program, citing the fact that payments are not adjusted by region. Sharp HealthCare announced the move in its third-quarter financial report.

The San Diego-based system of five hospitals achieved “meaningful reductions” in skilled nursing and hospital utilization while participating in the program, according to the quarterly report. Despite gaining these efficiencies, it was at risk for a “significant shared loss” because the Pioneer program would not take into account a substantial wage index increase in San Diego, Sharp leaders explained.

The Pioneer program began two years ago with 32 participants. Sharp is the 10th to pull out. Many have achieved quality improvements but fewer have reduced costs enough for the participating providers to gain shared financial rewards. 

Starting in 2015, ACOs that have reached certain goals could be paid prospectively on a per-beneficiary/per-month basis, allowing them to provide services not normally reimbursed by Medicare. The payments would take market conditions into account, according to the Centers for Medicare & Medicaid Services. Alison Fleury, chief executive of the Sharp ACO and senior vice president of business development, acknowledged that CMS is taking steps to adjust payments by region.

Pioneer ACOs are more high-risk and high-reward compared with those in the more expansive Medicare Shared Savings Program.

Despite Pioneer program attrition, many experts have said that ACOs and similar models will continue to expand. Long-term care providers should seek to join or align themselves with these organizations, they advise.


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