Another Pioneer ACO, Beacon Health, frustrated over performance, may exit program

Mercy Hospital, Portland, ME. Image from Google

Another Pioneer ACO participant, Beacon Health in Maine, is considering exiting the Centers for Medicare and Medicaid Services program after being hit with millions in penalties two years in a row.

Dartmouth-Hitchcock Medical Center in New Hampshire is also mulling whether to take a pause from the program in favor of CMS's Next Generation model in 2016, Healthcare Finance first reported Tuesday.

"We're considering frankly the same thing," Beacon Chief Financial Officer Jeff Sanford said on Thursday, two days after CMS released its Year 3 ACO results. "My guess is others are too."

A decision must be given to CMS by Sept. 14. One has yet to be made, said Sanford.

[Also: Dartmouth-Hitchcock may exit Pioneer ACO program, officials say]

"We would very much like to stay in a program with CMS," Sanford said. "We've applied for the Next Generation arrangement; we would very much like to continue on that."

Though it earned the second highest quality scores out of the 20 healthcare systems in Pioneer program --  number one was Belin-ThedaCare Healthcare Partners in Wisconsin -- Beacon did not meet CMS benchmarks for financial performance.

Beacon will pay $2.9 million for 2014 after owing $2.8 million in 2013 for its Year 2 performance, according to CMS figures. After reconciling the figures, Beacon will write a check to CMS for $2.6 million for its 2014 performance.

Sanford shares the same frustration of Dartmouth-Hitchcock's Rob Greene, executive vice president and chief population health management officer, in that the hospital exceeded quality performance standards and saved money, but not enough to meet CMS benchmarks.

"We continue to do an outstanding job on quality: for 2013, we were fourth out of 19; we moved that number up, we're certainly proud of that," Sanford said. "It's fantastic news on the quality side. On the financial side, what we've learned is the model that CMS put forth for the first three years really doesn't work in our favor."

Three areas make it difficult, he said.

[Also: See how Pioneer ACOs performed in 2014 (Data)]

The first is Maine in general already has a lower cost of care than the national average.

"Those baselines are trended using a national trend, not a regional or local trend, that does not help us," he said.

The second is Maine, as in general in the Northeast, has an older population.

The third is the addition in 2014 of two providers into the network. In 2014, Beacon added Mercy Hospital in Portland and Maine Coast Memorial into its Eastern Maine Healthcare System. The number of beneficiaries increased from about 9,000 to 14,000 and then to 22,000, he said.

"That it works against you in the model," Sanford said. "That's clearly been our experience, and it's frustrating. We feel like we're doing the right thing by expanding our network. It just didn't work in those financial models."

Earlier this year, CMS did an evaluation comparing the ACOs against near-market comparisons, Sanford said.

"We were consistently lower in cost," he said. "It's very much like Dartmouth-Hitchcock said, we feel like we're making progress on the cost side, but not within the model and constraints they put us under."

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Sanford said he would like to see CMS in future models make some kind of acknowledgement of local markets and regional differences. He believes CMS is listening to concerns and has been improving the Pioneer model through incremental steps.

If Beacon does opt out of Pioneer this year, it would continue to receive the same data on patients and care management services but would not be subject to payment reconciliation, Sanford said.

On Wednesday, Dartmouth-Hitchcock Medical Center said it was considering pulling out of Pioneer ACO, but had applied for the Next Generation model. The New Hampshire hospital also must make a decision by Sept. 14.

Twitter: @SusanMorseHFN