Medicare Announces New ACO Initiative: The Next Generation ACO Model

By: Fred Segal

On March 10, 2015, CMS announced that it will offer a new ACO Model in the near future:  The Next Generation (Next Generation) ACO Model.  The Next Generation Model will be separate and apart from the Pioneer and Shared Savings Program (MSSP) ACO models. However, all participants in the Pioneer and MSSP models are allowed to apply for admission into the Next Generation program. According to its press release, CMS “expects approximately 15 to 20 ACOs to participate in the Next Generation ACO model with representation from a variety of provider organization types and geographic regions.” There will be two rounds of applications, and “participation is expected to last up to 5 years.”

According to CMS, the Next Generation model has numerous distinctions from the MSSP and Pioneer models. Firstly, an ACO can choose options which contain higher levels of financial risk and reward than the MSSP and Pioneer program.  Also, CMS claims that its Next Generation model will use updated benchmarking methods that will “ultimately transition away from comparisons to an ACO’s historical expenditures. In addition, the model will offer “several ‘benefit enhancement’ tools to help ACOs improve engagement with beneficiaries,” such as:

1) greater access to home visits, telehealth services, and skilled nursing facilities;

2) opportunities to receive a reward payment for receiving care the ACO;

3) a process that allows beneficiaries to confirm their care relationship with ACO providers; and

4) greater collaboration between CMS and ACOs to improve communication with beneficiaries about the characteristics and potential benefits of ACOs in relation to their care.”

It will be interesting to see how many ACOs begin to opt to participate in riskier options offered by the new program.  Many criticized the original MSSP rules adopted in 2011 which require participating ACOs to assume risk after their third year of participation or face penalties.  In response, CMS proposed new rules which “would no longer require ACOs to face penalties after the third year, but they could forgo penalties only if they meet certain criteria. ACOs that fail to slow spending in their first two years would be excluded. All ACOs must assume the risk of penalties after six years if they want to remain in the program.” Almost all of the ACOs that have participated in the Pioneer program and the MSSP have opted tracks in which they do not take on any financial risk.

The Next Generation Model creates four payment systems and two risk tracks for its participants. Dr. Patrick Conway, the CMS deputy administrator for innovation and quality and its chief medical officer recently said that “one option in the [Next Generation Model] will almost be full risk.” Further, in a blog post published just after CMS’ announcement of the Model, Dr. Conway explained that the Next Generation Model “sets more predictable financial targets.” He added 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”

Applications for participation in the Next Generation ACO are due by May 1, 2015.

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