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Colorado’s Physician Health Partners Chosen as Pioneer ACO to Improve Care, Reduce Costs

In January of this year, Physician Health Partners (PHP), a medical management company that serves as the strategic partner to two IPAs and two collaborative groups, was selected as one of 32 health care organizations nationwide to be a Pioneer Accountable Care Organization (ACO) by the Centers for Medicare and Medicaid (CMS) Innovation Center.

Denver-based PHP’s network of 260 primary care physicians and 600 contracted specialists provide primary care for approximately 450,000 people across the seven metro counties, of which nearly 25,000 are covered by Medicare and are part of the ACO.

As the only entity to receive ACO designation in Colorado, PHP’s model is unique from other Pioneer ACOs because their partner practices are independent from a parent organization, not fully integrated nor owned by a system.

“Our independent practice structure is representative of the majority of health care models across the country, making our program of particular interest to CMS as a demonstration,” Dr. Alan Lazaroff, PHP Board Member and Physician Advocate, said.

As one of several options available for health care providers to improve coordination of care and reduce Medicare costs, the Pioneer ACO program is designed to enable organizations with demonstrated expertise in care coordination and risk management to rapidly expand their efforts and evaluate supportive payment models.

PHP’s providers have been accepting risk and managing care within budgets for their Medicare Advantage patients for several years, making the organization an excellent candidate for the Pioneer ACO.

“Our providers use a collaborative approach to care for all patients, working with hospitals, skilled nursing facilities and specialists to ensure patients receive excellent care throughout the system,” Lazaroff said. “Receiving ACO designation from the CMS Innovation Center validates our work and helps us expand our efforts with data support for our Medicare patients. The real benefit is PHP being in a learning collaborative environment with other Pioneer ACOs and receiving access to essential Medicare claims data to identify more opportunities to improve care and reduce costs.”

PHP received signed agreements and support from their physician groups and board to move forward with the initiative prior to applying.

“Our providers understand the importance of changing the health care delivery system and are eager to assist in determining payment models to support effective processes,” Glenn Smith, PHP Pioneer ACO Manager, said. “Our current system only pays for episodic care, rewarding providers for seeing as many patients as possible and reimbursing for test after test even if it’s not necessary. Care coordination saves the system money by preventing higher cost utilizations like emergency room visits and hospital readmissions, and it’s time our payment system rewarded providers for this work.”

The Pioneer ACO program had several options for payment and risk and each takes a different, phased approach.  In the model PHP selected, there is a possibility to share 50% of savings in the first year assuming the minimum savings rate is met.  The first year does not have any downside risk.  In year two, there is a 70% upside and downside risk, with a possible 5% cost sharing.  In year three of the program, there is a possibility PHP will move toward a population-based payment model and away from a fee-for-service model.   

CMS will also use a stringent list of 33 quality measures to partially measure the success of the ACO.  PHP must report on all 33 measures each year for all of the participating physicians.  The outcome of these measures will determine the percentage of financial sharing PHP will receive.   Quality measures fall into four major buckets: Patient/Caregiver Experience, Care Coordination/Patient Safety, Preventive Care, and At Risk Population.

Medicare total cost per patient calculations ranked PHP second for lowest overall cost of care amongst the 32 selected ACOs, largely due to the similar work they have done for years within their Medicare Advantage population.

“Our low costs mean we may not realize as high of a percentage of cost savings and financial benefits compared to our Pioneer ACO peers who have higher baseline costs,” Lazaroff said. “The goal is to change the way primary care is delivered to patients and ingrain this collaborative approach across the health care continuum.”  

PHP’s Medicare beneficiaries were automatically included in the ACO, were not required to enroll, and their Medicare benefits did not change.  Patients can see the provider of their choice, even if they are outside of PHP’s network. PHP was required by CMS to notify the nearly 28,000 aligned Medicare beneficiaries to inform them of the program and give them the option to opt-out of CMS sharing their claims data with PHP. Only a small percentage of patients chose to opt out, and many have since opted back in after talking to their physician and better understanding the value of the ACO program.

“The three years of retrospective and monthly claims data from Medicare allows us to identify trends across our patient population and show us where we have opportunities to improve care,” Smith said. “After explaining to patients that the data would help us take better care of them, many decided they wanted to participate.”

PHP’s role will be to support their primary care providers with tools and resources to assist them in patient coordination. Examples include providing monthly peer-to- peer learning opportunities, quality improvement coaches to assist with process improvement and data analytics and providing care managers and programs to help with the physicians’ complex patient population. Medicare began sending data to PHP for ACO aligned Members in March and they’re currently evaluating the data to identify interventions to address top areas of concern.

For more information about PHP, visit For more information regarding PHP’s Pioneer ACO, contact Glenn Smith, Pioneer ACO Manager at