A month and a half after announcing its proposed rule for Medicare Shared Savings Program Accountable Care Organizations (ACOs), the Centers for Medicare and Medicaid Services (CMS) has announced the authorization of up to 30 demonstrations of multi-payer “Pioneer Accountable Care Organizations“.

These Pioneer ACOs will be administered by the Center for Medicare and Medicaid Innovation and are intended to be complementary to the Medicare Shared Savings ACOs. Among the key differences are:

1) the minimum number of Medicare fee-for-service beneficiaries in the Pioneer ACO is 15,000, compared to 5,000 in the Medicare Shared Savings ACOs

2) Pioneer ACOs will be able to choose a prospective beneficiary assignment process (called “alignment”), based on the past three years of primary care visits to the primary care physicians participating in the Pioneer ACO; Pioneer ACOs also can use the retrospective beneficiary assignment process in the Medicare Shared Savings ACOs

3) CMS has the option to extend the three-year Pioneer ACOs for a fourth and fifth year if quality improvement and cost savings goals are met; the Medicare Shared Savings ACOs are now only proposed as three year demonstrations

4) both shared savings and losses for the first two performance years (savings up to 60% in the first performance year and up to 70% in the second performance year) and then, in the third performance year, a transition to a population-based  payment (a prospective, per beneficiary per month payment intended to replace a significant proportion of Medicare fee-for-service payments for those beneficiaries)[this would be partial global payment or capitation]

5) unlike the Medicare Shared Savings Program ACOs, where the ACO is making an agreement only with CMS, the Pioneer ACOs requires collaboration with state Medicaid agencies, private/commercial health plans, and self-insured employers; however, there is no increased availability of potential savings in the Pioneer ACOs for including Federally Qualified Health Centers (FQHCs) or Rural Health Centers in the Pioneer ACO

Other design issues, including the calculations of baseline and performance year benchmarks for costs savings and which quality measures will be used, will parallel the final rule for the Medicare Shared Savings ACOs.  While the Medicare Shared Savings ACOs will not begin until January 2012, the Pioneer ACOs may start sometime this calendar year 2011.

CMS notes that while it encourages applications from Pioneer ACOs led by FQHCs, it intends to develop additional demonstrations on coordinated care serving indigent communities, and serving Medicare-Medicaid dually eligible beneficiaries.

Mandatory letters of intent for the Pioneer ACOs are due June 10, 2011.  Full applications are due July 18, 2011.

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