The Pioneer ACO Model’s overall goal is to improve the delivery of Medicare services by reducing expenditures while preserving or enhancing the quality of care for patients. Beginning in 2012, CMS contracted with ACOs for a 3-year period and subsequently offered a 2-year contract extension to ACOs that completed the first three years.The ACOs are expected to meet the goal of the model, in part, by coordinating the care they provide to Medicare beneficiaries and engaging beneficiaries in their own care. CMS designed the model for organizations with experience in providing coordinated care to beneficiaries at a lower cost to Medicare. Another goal of the Pioneer ACO Model is to help inform potential future changes to the agency’s permanent ACO program, the Medicare Shared Savings Program (MSSP), which began about 3 months after the Pioneer ACO Model. MSSP ACOs share less financial risk with CMS than Pioneer ACOs, as many are not responsible for paying CMS for any losses that they may generate during their contract period. CMS established eligibility requirements for participation in the Pioneer ACO Model through the request for applications and the contract between CMS and Pioneer ACOs. The requirements include the following: Organizational structure. ACOs must be structured to allow the organization to partner with groups of providers including ACO professionals such as physicians or physician assistants, to accept joint responsibility for the cost and quality-of-care outcomes for a specified group of patients. For example, ACOs may be structured as ACO professionals in a group practice or as partnerships between ACO professionals and hospitals. Care improvement plan. ACOs must implement a care improvement plan, as they described in their applications. These plans include a range of care strategies such as providing remote patient monitoring to beneficiaries with chronic illnesses and engaging beneficiaries through shared decision making. Beneficiary protections. ACOs must ensure that their providers and suppliers make all Medicare-covered services available to beneficiaries and that they do not inhibit beneficiaries’ freedom of choice to obtain health services from providers or suppliers not participating in the model. The ACOs annually provide CMS with a list of the providers and suppliers that have elected to participate as Pioneer providers or suppliers. Quality performance standards. ACOs must completely and accurately report quality data annually to CMS for 33 measures that address four quality domains. The four domains are (1) patient experiences of care, (2) care coordination and patient safety, (3) preventive health care, and (4) disease management for at-risk populations, such as beneficiaries with diabetes. ACOs must also meet performance standards for quality. In the first year (2012), CMS defined the quality performance standard as completely and accurately reporting all of the quality measures, regardless of the ACO’s scores on the measures. Beginning in 2013, CMS required that ACOs score a minimum level for at least 70 percent of the quality measures within each of the four quality domains. CMS determined a minimum performance level for each quality measure, based on performance benchmarks.quality apply to all participating ACOs. CMS’s oversight and evaluation responsibilities are broadly defined in the contract between CMS and the Pioneer ACOs and in regulation. CMS is responsible for monitoring beneficiary service use and investigating any unusual service use patterns to assess, for example, whether ACOs may be compromising beneficiary care. CMS is also responsible for monitoring whether ACOs may be avoiding at-risk beneficiaries. CMS may use a range of methods to conduct this monitoring, including analyzing beneficiary and provider complaints, and may investigate patterns suggesting that an ACO has avoided at-risk beneficiaries. In addition, CMS’s oversight role includes monitoring ACOs’ compliance with the quality performance standards. CMMI’s Seamless Care Models Group is responsible for carrying out the agency’s oversight responsibilities for the model. CMS is responsible for conducting an evaluation of the model’s financial and quality performance results and making the evaluation findings available to the public in a timely manner. conduct the evaluation and has chosen to focus the evaluation on eight research areas, based on a conceptual model outlining the pathways in which various factors can affect ACO performance results. The eight research areas are (1) Medicare service use and expenditures, (2) unintended consequences of ACOs, (3) beneficiary access to care, (4) ACOs’ care coordination activities, (5) quality of care, (6) health care markets served by ACOs, (7) ACO characteristics, and (8) ACO attrition. See 42 U.S.C. § 1315a(b)(4). The law does not specify a timeline for making these findings available to the public. Under this provision, CMS is responsible for evaluating models to test innovative payment and service delivery, such as the Pioneer ACO Model. Taking into account the evaluation findings, the Secretary of Health and Human Services may expand the duration and scope of the Pioneer ACO Model. Medicare beneficiaries are assigned by CMS to Pioneer ACOs based on their prior use of primary care services. CMS refers to this as “alignment.” ACOs are responsible for the annual expenditures of their aligned beneficiaries. CMS determines through an analysis of Medicare claims data which beneficiaries have received the plurality of their primary care services from primary care providers affiliated with an ACO in the prior three years. The ACO’s financial performance is based on the annual expenditures of its aligned beneficiaries for services covered by Medicare Parts A and B, which include hospital stays, outpatient services, physician visits, and skilled nursing facility (SNF) stays. To assess financial performance, CMS includes the expenditures for services provided by the ACO as well as by non-ACO Medicare providers since aligned beneficiaries may continue to obtain services from providers that are not affiliated with the ACO. Pioneer ACOs chose one of five payment arrangements with CMS that specified the type of risk sharing and the sharing rates, that is, the percentage of savings or losses that the ACO shared with CMS. The type of risk sharing is one- or two-sided. Under one-sided risk sharing, the ACO may receive a payment from CMS if it generates a minimum amount of savings but does not owe CMS a payment if it generates losses. In comparison, an ACO owes CMS a payment if it generates a minimum amount of losses under two-sided risk sharing, and is eligible to receive a payment from CMS if it produces savings. Four of the five arrangements required two-sided risk sharing in the first and second years; the other arrangement allowed for one-sided risk sharing, but only in the first year. Half of the ACOs (16 of 32) that participated in the first year selected the arrangement with one-sided risk sharing in the first year, and half (16 of 32) selected arrangements with two-sided risk sharing. The sharing rate specifies the maximum amount of savings that the ACO can share with CMS and the maximum amount of losses that the ACO may share with CMS. The sharing rates increase from the first to the second year in each of the payment arrangements. (See table 1.) CMS determines whether each Pioneer ACO has generated savings, losses, or neither by comparing the actual expenditures for their aligned beneficiaries for each year against their spending benchmarks. Each ACO’s spending benchmark is based on the baseline expenditures for the ACO’s aligned beneficiaries. Specifically, the spending benchmark incorporates each ACO’s actual expenditures for their aligned beneficiaries from 2009 to 2011 and the Medicare national growth rate. CMS subtracts the ACO’s expenditures for each year from the ACO’s spending benchmark, and if the ACO’s expenditures are lower than the benchmark by at least a minimum amount, the ACO has produced shared savings. In contrast, if the ACO’s expenditures exceed the benchmark by at least a minimum amount, the ACO has generated shared losses. CMS calculates a dollar amount for each ACO’s final annual payment if the ACO generates shared savings or losses. To perform this calculation, CMS multiplies the amount of shared savings or losses by the ACO’s final sharing rate. For shared savings, CMS calculates the final sharing rate by multiplying the ACO’s sharing rate by its total quality score. As a result, ACOs with higher total quality scores will have higher final sharing rates for savings and thus, will receive a higher portion of any shared savings. To calculate the final sharing rate for losses, CMS first adds 40 percent to the ACO’s sharing rate and then subtracts the product of the sharing rate and the ACO’s total quality score. quality scores will have lower final sharing rates for losses and thus, will owe CMS a lower portion of any shared losses. The total quality score is calculated with the 33 quality measures that the ACOs report to CMS each year. ACOs earn from 0 to 2 points for each measure, depending on their level of performance relative to the performance benchmarks CMS established. The total quality score is a percentage of the maximum number of points that an ACO can earn for the measures combined. The maximum total quality score is 100 percent. As an example of a final sharing rate for an ACO with savings, an ACO with a sharing rate of 50 percent and a quality score of 80 percent would have a final sharing rate of 40 percent (0.50 x 0.80 = 0.40). In this example, CMS would pay the ACO an amount equal to 40 percent of the shared savings it generated. (See fig. 1.) CMS applies a ceiling to this calculation equal to the sharing rate established in the ACO’s payment arrangement. Fewer than half of the ACOs that participated in the Pioneer ACO Model in the first two years earned shared savings in each year, although the ACOs overall produced net shared savings.