On May 4, 2015, CMS announced that the Center for Medicare & Medicaid Innovation (CMMI) demonstration project, the Pioneer Accountable Care Organization (ACO) Model, saved more than US$384 million in its first two years. According to an evaluation report released by the Department of Health and Human Services (HHS), the Model saved an average of approximately US$300 per participating Medicare beneficiary per year, while continuing to deliver high-quality patient care.

The Office of the Actuary in the Centers for Medicare & Medicaid Services (CMS) has also certified that the Pioneer ACO Model meets criteria for expansion to a larger population of Medicare beneficiaries. To be expanded, demonstrations must either reduce spending without reducing the quality of care or improve the quality of care without increasing spending. CMS' Chief Actuary must certify Medicare spending projections for demonstrations and CMS must determine that a demonstration's expansion would not limit benefits. CMS is planning to expand the Pioneer ACO demonstration.

Significantly, this will be the first time CMS has used its authority to allow CMMI to expand a demonstration project. How CMMI does so will be watched carefully as it will set a precedent for future expansions and otherwise provide insight into CMMI’s approach to such expansions.

The Pioneer ACO Model encourages healthcare organizations’ accountability for quality and cost outcomes for their Medicare patients. Pioneer ACOs work to coordinate patient care, keep patients healthy, and meet certain quality performance standards to share in savings generated for Medicare and avoid having to pay a share of any losses generated. The Pioneer ACOs Model began in 2012 with 32 medical systems. Only 19 organizations remain in the Pioneer ACO program now. Some ACOs that left the Pioneer ACO Model switched to the Medicare Shared Savings Program.

The Pioneer ACO Model is currently serving more than 600,000 Medicare beneficiaries. To test whether the Model generated savings, CMS researchers compared the experiences of beneficiaries assigned to  Pioneer ACOs with those of a similar group of beneficiaries. According to the evaluation report, compared to beneficiaries in regular fee-for-service or Medicare Advantage plans, Medicare beneficiaries who are assigned to Pioneer ACOs, on average 

  • use fewer inpatient hospital services and have more follow-up visits with their providers after hospital discharge;
  • have fewer tests and procedures and better care coordination; and
  • report more timely care and better communication with their providers.

More information about the Pioneer ACO Model can be found here.