CMS Introduces New ACO Model with Increased Risk-Sharing


In a blog post on Monday, March 9, Patrick Conway, Deputy Administrator for Innovation and Quality and Chief Medical Officer for the Centers for Medicare & Medicaid Services (CMS), announced the Next Generation Accountable Care Organization (ACO) model-a third ACO model based on previous experience with the Pioneer ACO model and the Medicare Shared Savings Program (MSSP). The new model, set to take effect next January and hailed by some and criticized by others, will allow more flexibility than the agency's other ACO models and appears to be structured more along the lines of Medicare Advantage plans.

There are 2 rounds of applications (2015 and 2016) and participation is expected to last up to five years. Each performance year (PY) of the new model may see slightly tweaked metrics to encourage the ACOs to improve their care and reduce costs. If an organization wishes to participate and would like to apply in 2015, applications are due to CMS by June 1.

The risk-sharing for Next Generation ACOs is appreciably higher than the 50% and 60% in previous models. One arrangement for the new model has ACOs absorbing 80% to 85% risk, while ACOs will absorb 100% risk in the other arrangement.

HPW CMS New ACO Model Image

As with the Pioneer ACO model and MSSP, Part D spending is not included in the Next Generation ACO model.

CMS plans to provide more tools-many of which resemble those adopted by Medicare Advantage plans-to participating organizations to encourage quality improvement and care coordination, including:

  • Predictable financial targets. The model will continue to use historical expenditures data to develop baselines and benchmark performance for Years one through three. ACOs are rewarded on their year-to-year improvement over historical expenditures, but the magnitude of improvement needed will vary based on efficiency relative to other providers in their region. For Years four and five, this methodology may change; CMS intends to provide details no later than the end of 2017.
  • Flexible payment options to support ACO investments in infrastructure aimed to improve care. The program will also offer four different payment models:
    1. Normal fee-for-service (FFS) payment
    2. Normal FFS payment + monthly infrastructure payment
    3. Population-based payments
    4. Capitation
  • Better tools to coordinate care for beneficiaries. Examples are waivers to provide:
    • Telehealth services
    • Post-discharge home services
    • Coverage of skilled nursing facility (SNF) care without prior hospitalization
  • Improved collaboration between CMS and participating ACOs to communicate with beneficiaries about the potential benefits ACOs can provide.
  • Reward payments to participating beneficiaries. Beneficiaries can still choose to receive care outside of ACO providers without any penalty, as they are still enrolled in fee-for-service Medicare, but they may receive rewards of up to $50 per year for seeing providers in the ACO network.
  • Allow beneficiaries to confirm a care relationship with ACO providers (called voluntary alignment). Beneficiaries can communicate their care preferences directly with their clinicians.

In a fact sheet describing the new ACO model, Health and Human Services (HHS) secretary Sylvia Burwell notes that this model is in place to "set clear, measurable goals and a timeline to move the Medicare program-and the healthcare system at large-toward paying providers based on the quality, rather than the quantity, of care they give patients." Burwell's ultimate goal is to move an increasing percentage of Medicare dollars into alternative, quality-based payment models and away from traditional FFS care that drives most of Medicare's annual spending.

Dr. Conway estimates that 15 to 20 ACOs will participate in this model.

While the overall intent of the ACO plan is to improve the quality of care for patients and achieve cost savings, there are several issues that pose challenges for the Medicare ACO models generally and the Next Generation ACO specifically:

  • Issue 1: All Medicare ACO models include patients who voluntarily enroll, but they also include patients selected based on claims data who are "involuntarily enrolled." Their data are used to measure the success of the ACO, but the patient is not really an official participant of the ACO and its efforts. This involuntarily enrollment could reduce the effectiveness of the ACO; a one-sided arrangement that does not involve the patient's active participation can limit outcomes
  • Issue 2: The Next Generation ACO model has the provision to offer certain benefits to patients, such as waivers to provide SNF facility care without a previous hospitalization. While participating ACOs have the option to choose which benefit enhancements they want to provide to their patients, a feature such as this could be a way for CMS to test a redesign of the current SNF benefit offered to FFS enrollees. This could encourage long-term SNF care, which, if adopted, could increase costs to the Medicare program substantially. Medicare is currently not in the business of providing long-term care, and the costs for these services are very high; careful consideration will likely be made in evaluating the use of these services for patients outside of the standard benefit design of the Medicare program.

It is unclear what effect this week's announcement will have on the impending final MSSP ACO rule expected this spring.

The above excerpt was featured in the 3/13/2015 issue of Health Policy WeeklyHealth Policy Weekly, a weekly e-newsletter delivered every Friday, recaps legislative and regulatory developments and healthcare reform news that impacts the healthcare industry.Health Policy Weekly  is developed by Xcenda as a complimentary service for clients of AmerisourceBergen Corporation as well as industry decision makers within the manufacturer, managed care, healthcare provider and pharmacy community.  Click here for more information or to subscribe to Health Policy Weekly



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