CMS Unveils New ACO Investment Model to Support Healthcare Coordination

By: McKenzie Livingston

The Centers for Medicare & Medical Services (CMS) encourages healthcare providers to participate in Accountable Care Organizations (ACOs) through the Medicare Shared Savings Program (MSSP), which creates financial incentives for ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting Medicare beneficiaries first.

On October 15, 2014, CMS announced a new ACO Investment Model to respond to research and concerns expressed by stakeholders about the need for capital investment in the infrastructure necessary for successful population health management, mainly health information technology infrastructure. CMS will provide financial support to qualifying ACOs to make infrastructure investments and develop new ways to improve care for Medicare beneficiaries.

The model will provide upfront capital and per-member, per-month payments as a pre-payment for shared savings to:

(1) ACOs entering MSSP in 2016 to encourage uptake of coordinated, accountable care in rural geographies and areas where there has been little ACO activity; and

(2) existing ACOs that joined MSSP in 2012, 2013 and 2014 to encourage them to progress to higher levels of financial risk, ultimately improving care for beneficiaries and generating Medicare savings.

The structure of these payments address both the fixed and variable costs associated with forming an ACO.

CMS has indicated that it will favorably consider existing ACO applicants that are willing to commit to transition to downside risk in future renewal terms and that have demonstrated high-quality and financial performance during the most recent performance year, among other factors. For ACOs with 2016 start dates, CMS will similarly prioritize selection of ACOs in rural areas and areas with low ACO penetration.

To be eligible to apply, an ACO must have (1) 10,000 or fewer attributed beneficiaries, (2) may not have a hospital as an ACO participant or provider/supplier unless that hospital has 100 or fewer beds or is a critical access hospital (3) may not be owned or operated by a health plan, and (4) may not be a participant in the Advance Payment ACO Model.

The application period for ACOs that entered MSSP in 2012 and 2013 will remain open through December 1, with payments scheduled to begin in the second quarter of 2015. The application period for ACOs with MSSP start dates in 2014 or 2016 will open in summer 2015.

To learn more about the new ACO Investment Model, please click here.

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