Sharp Healthcare Becomes Latest to Depart Medicare Pioneer ACO Program

Sharp Healthcare, a San Diego-based health system, is having its accountable care organization (ACO) depart the Medicare Pioneer ACO program

The news means that Sharp is the 10th and latest to leave the voluntary government initiative. Last year, nine of the original 32 Pioneer ACO programs left the initiative. Many transitioned to the less intense Medicare Shared Savings program, while some left government initiatives altogether. 

It's unclear what Sharp will do. The departure was announced in a financial earnings report. The health system, with two of its affiliated medical groups, formed the ACO in 2012. It was able to cover 28,000 beneficiaries and reduce readmission rates, Sharp Healthcare CEO, Alison Fleury said to Californiahealthline.org.

Financially, things weren't as certain. In years one and two, Sharp says its ACO’s performance made it so the organization was able to break even, meaning no shared savings payments were earned and no increased cost payments were due. However, they forecasted a much worse performance in Year 3 and decided to drop out. 

"Because the Pioneer financial model is based on national financial trend factors that are not adjusted for specific conditions that an ACO is facing in a particular region (e.g., San Diego), the model was financially detrimental to Sharp ACO despite favorable underlying utilization and quality performance," Sharp wrote in its earnings report.

According to Fleury, the Centers for Medicare and Medicaid Services (CMS), understands there is a problem and will be implementing regional criteria into the 2015 model.