In this case, Cigna Medical Group is taking on risk, but the majority of New Century's customers are in fee-for-service environments. Fee-for-service is where the 28,000 patients that had been part of Sharp's Pioneer ACO are headed; some Pioneer dropouts moved to privately managed ACOs under Medicare Advantage, while Banner Health remains in the Pioneer program.

Geography apparently has a lot to do with the fate of Pioneer sites.

"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 management said in the health system's most recent quarterly report.

Hamza Hasan, a senior consultant at the Advisory Board Company in Washington, D.C., said there are three flaws with the Pioneer ACO program as currently construed: the national benchmark on cost; not knowing which patients they will manage; and the fact that CMS does not send providers data as often as many commercial payers do.

"Sharp had already been doing well at cost reduction," Hasan said. However, Sharp executives said wage growth in the San Diego area has outpaced the national average since the Pioneer ACO program began in 2012, so the organization was starting to lose money from its participation.

It also was difficult for Sharp to provide preventive services for the 28,000 designated patients because, unlike Medicare Advantage managed care, they could go to any physician or hospital at any time. "When we've spoken with leaders of Pioneer ACOs, we've heard that patient churn and the network leakage issue as something they have really struggled with," Hasan said in an interview published on an Advisory Board blog. 

"If you are able to keep patients in the network, it is easier to manage them," Hasan told Healthcare IT News. Preliminary research from Advisory suggests that more patients are going outside of the network if they are in the Medicare Shared Savings Program – the basis for the Pioneer program – than if they are part of a private ACO, he said.

Nor do providers know which Medicare patients their management bonuses depend on. "You can be more proactive with outreach if you know what patients you need to manage," Hasan added. 

Similarly, it is easier to manage patients with up-to-date records, and Medicare provides claims data to Pioneer participants no more than quarterly, according to Hasan. Health systems often negotiate for a monthly data feed from commercial payers. 

CMS has said it is considering a local payment standard for the second round of ACO contracts, which are scheduled to go out next year. However, the White House Office of Management and Budget, which reviews all federal regulations, reportedly blocked a proposed rule this summer on the new contracts.