In my first post in this three-part series, I documented three problems with Pioneer ACOs: High churn rates among patients and doctors; assignment to ACOs of healthy patients; and assignment of so few ACO patients to each ACO doctor that ACO “attributees” constitute just 5 percent of each doctor’s panel. I noted that these problems could explain why Medicare ACOs have been so ineffective.
These problems are the direct result of CMS’s strange method of assigning patients to ACOs. Patients do not decide to enroll in ACOs. CMS assigns patients to ACOs based on a two-step process: (1) CMS first determines whether a doctor has a contract with an ACO; (2) CMS then determines which patients “belong” to that doctor, and assigns all patients “belonging” to that doctor to that doctor’s ACO. This method is invisible to patients; they don’t know they have been assigned to an ACO unless an ACO doctor tells them, which happens rarely, and when it does patients have no idea what the doctor is talking about. 
This raises an obvious question: If CMS’s method of assigning patients to ACOs is a significant reason why ACOs are not succeeding, why do it? There is no easy way to explain CMS’s answer to this question because it isn’t rational. The best way to explain why CMS adopted the two-step attribution method is to explain the method’s history.