Steward, Mount Auburn quit Medicare pilot program

Two systems join others citing financial reasons

A federal pilot program that has shown mixed success in cutting Medicare costs by better coordinating care for elderly patients is losing two of its members in Massachusetts.

Steward Health Care System and Mount Auburn Hospital's physician network have followed several other providers across the country that have left the pilot, called the Pioneer accountable care organization program, largely for financial reasons. At least half of the 32 health systems that were initially participating in the program have left.

Both Steward and Mount Auburn said they will join a similar federal program, which launches next year, because the rules make it more financially attractive to them than the earlier program.

Accountable care organizations are groups of doctors and hospitals that manage patient care under set budgets. They are penalized for going over budget and keep the savings when they achieve high quality scores and come in under budget.

Mount Auburn Hospital's physician network saved about $14 million over three years in Pioneer program, but it expected to lose money under new rules that reduced the budget it would have received to care for patients, said Dr. Barbara Spivak, president of the Mount Auburn Cambridge Independent Practice Association, the doctors group affiliated with Mount Auburn Hospital. Instead of abandonding the accountable care model, however, the physicians group decided to join the new federal program, called Next Generation accountable care organizations, which Mount Auburn expects will have more favorable rules.

"We are extremely committed to the concepts of an accountable care organization," Spivak said. "But because financial benchmarks were changed [under Pioneer] ,we were at financial risk."

Steward, the for-profit doctor and hospital network headquartered in Boston, saved about $30 million over three years in the Pioneer pilot, but expects it can do better under the Next Generation program. Steward officials said the new program will allow them to take more financial risk in caring for their patients, meaning they face greater potential losses if they exceed their budgets, but also greater potential rewards for performing well, said Dr. Sanjay Shetty, president of the Steward physicians network.

"In a lot of ways, it is Pioneer ACO on steroids," he said.

The new program, like the original Pioneer program, will include home visits, and access to health coaches and social workers — services that are not covered by traditional insurance payments. Health systems provide these services to try to keep patients well and prevent expensive medical problems.

Nationally, even though many organizations have dropped out of the Pioneer program, the initiative saved $304 million in three years, according to federal officials. About $141 million of those savings were in Massachusetts.

Three Massachusetts health care systems remain in the Pioneer program: Partners HealthCare, Beth Israel Deaconess Care Organization, and Atrius Health.

The federal government has set a goal of moving half of Medicare payments into new payment models, such as accountable care organizations, by 2018. Private insurers have also adopted similar models that tie payments to how well health care providers stick to a budget and meet certain quality metrics. But most health care payments are still under fee for service, meaning doctors are compensated for every service and procedure, regardless of the quality of care.

Alternative payment programs are still in the early stages and will continue to go through changes, said Josh Seidman, senior vice president at Avalere Health, a Washington consulting firm. "What counts as alternative payment models is still being determined," he said.