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Dartmouth-Hitchcock Exits Pioneer ACO Program

Some experts fear the Medicare ACO model is unsustainable

The news of high-profile Dartmouth-Hitchcock’s departure from the Pioneer Accountable Care Organization (ACO) program is adding to the significant debate regarding Medicare ACOs.

As reported by Fierce Healthcare, the Pioneer and Shared Savings Programs generated more than $411 million in savings in 2014, but the success of the model means more than financial value. "For these things to work, it has to be not just a value-based conversation but it also has to be about how the practice is actually managed,” Richard Barasch, chairman and CEO of Universal American Corporation, told Kaiser Health News (KHN). Barasch’s organization includes Collaborative Health System, which runs 25 Medicare Shared Savings ACOs.

Medicare ACOs provide incentives to encourage annual wellness visits for Medicare beneficiaries, but many doctors are unaccustomed to treating patients as customers to whom they should market their services.

Moreover, despite encouraging news on shared savings, Medicare ACOs' performance results have left much to be desired, according to Robert Murray, president of consulting firm Global Health Payment. The performance issues, Murray told KHN, come down to inherent design flaws: ACO formation requires substantial capital, but participating hospitals and specialists have no incentive to control costs under the traditional fee-for-service model, meaning they will turn a profit by generating more volume — the precise opposite of the ACO model's goals.

Dartmouth-Hitchcock confirmed it will exit the Pioneer ACO program after high quality scores but disappointing financial performance, Healthcare Finance News reported. While Dartmouth-Hitchcock's ACO hopes to join Medicare's Next Generation model next year, the Pioneer model may prove "unsustainable," according Robert A. Greene, executive vice president and chief population health management officer for the ACO.

Sources: Fierce Healthcare, October 21, 2015; Kaiser Health News, October 21, 2015; Healthcare Finance, October 20, 2015.

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