Six Things to Know About the Next Generation ACO Model

CMS recently announced its latest shared-savings payment and delivery care model, the "Next Generation ACO Model," which will begin Jan. 1, 2016. Here's what you need to know about the new model, and how it differs from other accountable care organization (ACO) models currently in place.

1. There are higher risks and higher rewards. The next generation model offers financial arrangements with higher levels of risk and reward (based on quality and cost performance) than current Medicare ACO initiatives. For that reason, it's likely that only those organizations that have a strong background and track record in accountable care will find the program the right fit. CMS expects that approximately 15 to 20 ACOs will participate in the model, which will consist of three initial performance years and two optional one-year extensions.

2. There are new perks for participating. While participating in the new model requires organizations to take on more risk, there are some perks that come along with that. In a blog appearing on CMS.gov, Patrick Conway, deputy administrator for innovation and quality and chief medical officer at CMS wrote that, "To support increased risk, ACOs will have a stable, predictable benchmark and flexible payment options that support ACO investments in care improvement infrastructure to provide high quality care to patients."

He added that participants will also have a number of "tools" available to them,  including additional coverage of telehealth and post-discharge home services; coverage of skilled nursing care without prior hospitalization; and reward payments to beneficiaries for receiving care from ACOs.

3. There are new incentives for patients. As Conway noted, one of the tools available to participants in the new ACO model will be rewards to beneficiaries for receiving care from ACOs. Though, as in other ACO models, patients will not be required to participate in the ACO (and they will not be penalized for visiting non-ACO providers), beneficiaries may receive a reward for receiving the majority of their care from ACO providers, according to CMS. This may make it easier for participating providers to retain more control over costs and quality of care provided to ACO patients, and therefore, increase the likelihood of succeeding in the program.

4. There are different risk tracks and payment options. The new model offers a selection of payment mechanisms to enable a "graduation from fee-for-service (FFS) reimbursements to capitation," according to a document answering frequently asked questions (FAQ) on the CMS website. In year two of participation, participants will have the option to participate in full capitation. "Capitation will function by estimating total annual expenditures for aligned beneficiaries and paying that projected amount to the ACO in a per-beneficiary per-month (PBPM) payment with some money withheld to cover anticipated care by providers not participating in capitation," the document states.

5. Current ACO participants are not excluded from applying. Current participants in the Medicare Shared-Savings Program (MSSP) and in the Pioneer ACO Model can apply to participate in the next generation model. However, they cannot participate in both this model and the MSSP or the Pioneer ACO Model at once, according to CMS.

6. The new model may address a top concern among current ACO participants. A common criticism against the current ACO programs is that it becomes more and more difficult for participants to earn savings every year. But according to CMS, the next generational model attempts to address this problem. One way is by incorporating a relative efficiency discount. ACOs that have already attained cost efficiency compared to their regions will have a more favorable discount, according to the FAQ. It states, "Under this approach, ACOs achieve savings through year-to-year improvement over historic expenditures (improvement), but the magnitude by which they must improve will vary based on relative efficiency (attainment)."