CMS Unveils New ACO Model With More Financial Risk, More Shared Savings

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By Steve Teske

March 10 — The Centers for Medicare & Medicaid Services unveiled a new accountable care organization model in which providers will assume greater risk while also potentially sharing in more savings.

The so-called Next Generation Model of ACOs “will have a stable, predictable benchmark and flexible payment options that support ACO investments in care improvement infrastructure that provides high quality care to patients,” the Department of Health and Human Services said in a March 10 news release.

The new model will offer a selection of payment mechanisms to enable a graduation from fee-for-service reimbursements to capitation, the CMS said.

The CMS said the new ACO model “is an initiative for ACOs that are experienced in coordinating care for populations of patients. It will allow these provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and Shared Savings Program (MSSP).”

“The goal of the Model is to test whether strong financial incentives for ACOs, coupled with tools to support better patient engagement and care management, can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries,” the agency said.

Medicare ACOs comprise groups of doctors, hospitals and other health-care providers and suppliers who come together voluntarily to provide coordinated, high-quality care at lower costs to their patients, according to the CMS.

In materials the CMS released March 10, the agency explained the difference between ACOs, which are for fee-for-service beneficiaries, and the Medicare Advantage managed care option. For example, the agency said, all of the CMS’s ACO models “are part of the Original Medicare Program and follow Original Medicare rules and processes, and ACO beneficiaries have freedom of choice to go to Original Medicare providers.”

Addressing Provider Concerns 

Josh Seidman, vice president for payment and delivery reform at consulting firm Avalere Health, told Bloomberg BNA the new model is an attempt by the CMS to encourage ACOs to take on greater financial risk by addressing their concerns about the program in a number of areas.

For example, Seidman said the new model will give providers more flexibility in offering rewards to patients and attempts to create more beneficiary engagement through home visits and telehealth. The new model also increases communication and collaboration with the CMS, he said.

The new model also will produce a “more stable financial approach” for ACOs by altering the way in which savings and risk will be calculated, Seidman said.

The release said the new ACO model will encourage greater coordination and closer care relationships between ACO providers and beneficiaries. ACOs also will have a number of tools available to enhance the management of care for their beneficiaries that will include rewards to beneficiaries for receiving their care from physicians and professionals participating in their ACOs, coverage of skilled nursing care without prior hospitalization, and modifications to expand coverage of telehealth and post-discharge home services to support coordinated care at home, the release said.

Also commenting on the new ACO model was the Premier health-care alliance. Premier said, “We are eager to begin working with our members to assess the Next Generation ACO Model. Today’s announcement gives healthcare providers another Medicare payment option with substantially greater flexibility to provide innovative, high quality care to a defined group of beneficiaries.”

Supporting Patient-Centered Care 

The CMS said the new model “also supports patient-centered care by providing the opportunity for beneficiaries to confirm a care relationship with ACO providers and to communicate directly with their providers about their care preferences.”

“This ACO model responds to stakeholder requests for the next stage of the ACO model that enables greater engagement of beneficiaries, a more predictable, prospective financial model, and the flexibility to utilize additional tools to coordinate care for beneficiaries,” Patrick Conway, deputy administrator for innovation and quality and chief medical officer for CMS, said in the release.

The CMS will accept ACOs into the Next Generation ACO Model through two rounds of applications in 2015 and 2016, with participation expected to last up to five years, the release stated. Organizations interested in applying in 2015 must submit a Letter of Intent by May 1 and an application by June 1. Second round Letters of Intent and applications will be available in spring 2016, according to the agency.

The agency said it expects between 15 and 20 ACOs to participate in the new ACO model with representation from a variety of provider organization types and geographic regions. The model will consist of three initial performance years and two optional one-year extensions. Seidman said he expects some providers will be ready to operate under the new model immediately, while others will join in the near future.

More information on the new ACO model is at


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