Advanced Payment Model ACO

By Mike Segal

On October 20, 2011, CMS announced its Advanced Payment ACO Model (“APM”).  The purpose of the APM is to help fund ACO formation for independent physician groups who might be reluctant to form an ACO because of the costs required to do so. 

CMS will accept up to 50 APMs.  To qualify, a physician group must collectively generate less than $50 million in annual revenues.

CMS will financially support an approved APM in three ways:  (1) an upfront, fixed payment of $250,000; (2) an upfront, variable payment of $36 per Medicare beneficiary (based on the preliminary, prospectively assigned beneficiaries); and (3) ongoing monthly payments of $8 per preliminarily assigned beneficiary, paid through June 2014.    The total payments will be sizable.  For example, an APM with 10,000 assigned beneficiaries would receive a total of $2,770,000 in funding. Repayments will come from the shared savings to which the ACO is entitled to receive during its initial contract term.  If the ACO completes the contract term and does not renew, any advanced payment amount still owed is forgiven!  This allows an ACO whose physicians must undergo a radical “culture change” in adopting to an outcomes based methodology to do so largely at CMS’ expense!

It is important to note that the APM is only available to an ACO with a start date of either April 1 or July 1, 2012.  Here’s where the rubber meets the road!  If you are contemplating an ACO, and your group wants to qualify for the APM, you have no time to spare.  The deadline for applications for an April 1 start date is February 1; the deadline for applications for a July 1 start date is March 31!!!!!!

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