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MedPAC Plans Closer Look at Medicare ACOs

By Rebecca Adams, CQ HealthBeat Associate Editor

September 12, 2013 -- The Medicare Payment Advisory Commission (MedPAC) plans to more closely examine Medicare accountable care organizations (ACOs) and at its meeting last week reacted to a potential new way to encourage patients within ACOs to use in-network providers.

Within the next few months a contractor for MedPAC will interview some of the participants in Medicare ACOs and report back on those experiences. Currently, the Medicare shared-savings program includes 220 groups of providers and 23 groups are in the Pioneer ACOs.

The interviews will focus on the Pioneer program, which generated some controversy in July when Medicare officials reported that seven of the groups switched to the shared-savings model and another two dropped out of Medicare ACOs altogether.

The July 16 report summarizing the first year of the Pioneer program showed that of the 32 Pioneer ACOs, 18 groups saved money (with 13 generating enough to get some money back from Medicare) and 14 ACOs lost money in 2012.

The Pioneer program was intended for higher-performing groups. It has both more difficult requirements and higher potential rewards than the shared-savings program. Some of the reasons organizations seem to find the Pioneer program less attractive included the challenges of identifying beneficiaries and encouraging them to get care within the networks that the ACO has created; the methods used to calculate savings; and the concern that organizations that are already high-performing may not be able to make further improvements and make enough money to make the investments worthwhile.

Commissioners noted that the savings in the first year of the Pioneer program were reported to be 0.5 percent, while the costs of using more care coordinators and running the ACOs were 1 to 2 percent that year.

"Is that sustainable? It doesn't seem so," said commissioner David Nerenz, the director of the Center for Health Policy and Health Services Research at the Henry Ford Health System in Detroit.

The MedPAC staff also revealed a proposal that could encourage seniors to go to doctors and other providers that are part of the ACO in which the patients are enrolled. Commissioners noted that some beneficiaries may have no idea that they are even in an ACO because patients can still choose to go to any provider that accepts Medicare. The commission staff brought up the idea of promoting the creation of a Medigap supplemental insurance plan that could give beneficiaries discounts for visiting providers within the ACO networks.

Some commissioners seemed to buy into the notion that a new Medigap plan would increase loyalty among consumers to ACO providers.
However, some felt that creating a new plan could be complicated.

"That could be even more confusing to the beneficiaries," worried commissioner Jack Hoadley of the Georgetown University Health Policy Institute, MedPAC Chairman Glenn Hackbarth outlined two major areas that he wants the panel to start exploring. The first is whether the panel should come out with a recommendation about whether Medicare officials should require providers in the next contract rounds of the programs to face penalties if they do not achieve savings targets. The second is whether the commission should examine whether the savings targets that are being set are appropriate for each type of organization.

"If people are losing money because they're being punished for being efficient in the past, there's going to be a lot of unhappiness," said Hackbarth.

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