CMS's most ambitious accountable care payment model to date presents more risk for providers, but offers financial enhancements to sweeten the pot.
With the announcement of a new accountable care payment model last week, federal officials are forging ahead with their efforts to boost value-based payments for Medicare services.
The Next Generation ACO model unveiled last week seeks to advance Medicare's accountable care payment initiatives, according to Patrick Conway, MD, chief medical officer and deputy administrator for innovation and quality at the Centers for Medicare & Medicaid Services.
"Building upon experiences from the Pioneer ACO model and the Medicare Shared Savings Program, the Next Generation ACO… sets more predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality of care," Conway wrote in a CMS blog post.
A fact sheet for Next Generation ACO lists several "core principles" for the new accountable care payment model:
- Protecting Medicare fee-for-service beneficiaries' freedom to seek the services and providers of their choice
- Engaging beneficiaries in their care through benefit enhancements that directly improve the patient experience and reward seeking care from ACOs
- Creating a financial model with long-term sustainability
- Using a prospectively-set benchmark that incentivizes quality, rewards both improvement and attainment of efficiency, and transitions away from an ACO's recent expenditures when setting and updating the benchmark
- Limiting fluctuations in aligned beneficiary populations and respecting beneficiary preferences by supplementing a prospective claims-based alignment process with a voluntary process
- Smoothing ACO cash flow and supporting investment in care improvement capabilities through alternative payment mechanisms
In an indication that the Next Generation ACO is an advanced accountable care payment model, CMS forecasts that only 15 to 20 healthcare organizations will participate. That level of participation would be on par with Pioneer ACO, which currently has fewer than two dozen participants down from 32 at the start.
Will More Pioneer ACOs Defect?
Healthcare organizations interested in participating in the Next Generation ACO program face a May 1 deadline to submit a letter of intent to CMS.
High Hopes
In a statement provided to HealthLeaders last week, CMS said the Next Generation ACO "offers the highest accountability – or risk – of any ACO model to date, and that risk is paired with ways to better engage the beneficiary and offer services beyond traditional Medicare like [skilled nursing facility] stay without three-day hospitalization, expanded telehealth services, and a reward direct to beneficiaries for using ACO providers."
The statement also provided the rationale behind CMS's estimate for the participation level in Next Generation ACO: "This is a model that tests many new concepts… We also expect organizations willing to assume this level of accountability will have had previous ACO experience and familiarity with similar alternative payments that align reimbursement with value and better health."
Providers Cautiously Optimistic
Healthcare providers say they want to see more details about Next Generation ACO, but are generally positive about the initiative.
Janis Orlowski, MD, chief healthcare officer at the Association of American Medical Colleges, says the Next Generation ACO appears to be a step in the right direction for Medicare's accountable care programs.
"I applaud them for listening to what our concerns were and coming out with a different program. In the end though, the devil is going to be in the details," she said last week. "These programs become very complicated through the course of their development."
Orlowski says Next Generation ACO appears to address two areas in Medicare's accountable care programs that have drawn withering criticism from healthcare providers: long-term stability in the setting of program's financial benchmark and assignment of Medicare beneficiaries to ACO organizations to allow providers to work more closely with their patients.
Orlowski says benchmark calculations for MSSP and Pioneer ACO have been problematic for providers. "Each year, [CMS] has calculated it in a slightly different way," she said. "They're short on details, but what they say is they're creating a model with long-term stability."
Providers will be watching how the Next Generation ACO model addresses the patient-assignment element of the program closely, Orlowski says. "In the fact sheet, they say beneficiaries will still have the flexibility they have in the fee-for-service model, which is a concern for providers. If the issues about beneficiary assignment are not clearer, there will be concerns about the Next Generation ACO."
Robert Wah, MD, president of the Chicago-based American Medical Association, makes similar observations.
"From what we have seen, the new ACO model could be a step forward and may help physicians improve care quality and lower costs. For example, the Next Generation ACO program will help physicians better predict their patient populations and will allow patients to voluntarily choose to become involved in an ACO, both tenets we raised in our comment letter last month. The program will also provide more budget predictability, so ACOs can plan ahead for how to achieve needed savings. The AMA additionally supports CMS' decisions to waive certain Medicare regulations, such as the three-day hospital stay required for nursing home coverage, and to expand the use of telemedicine, which will allow participants to better coordinate care."
Premier Inc. says the Next Generation ACO adds a welcomed accountable care option for Medicare providers, but few organizations are prepared to participate in the new model.
"We believe it's important for CMS to offer a broad array of options that span across the risk continuum. This gives providers the choice to select the model that best fits where they are in the journey to alternative payment and accountable care," Premier said in a statement. However, "it appears to involve even greater risk, providing a range of advanced payment models, including capitation. Since this is probably the most advanced option of all the ACO programs, it's not likely that a plurality of facilities have the skills, capabilities, infrastructure and appetite for the risk that would be necessary to participate. But it still will provide valuable learnings for others that are rapidly working to get there."
The healthcare providers that have the wherewithal to participate in the Next Generation ACO will be playing a trailblazing role in ongoing efforts to push Medicare away from the fee-for-service payment model, Premier suggests.
"We really support CMS' willingness to test new beneficiary engagement strategies using telehealth, home health and skilled nursing care without a prior hospitalization. We also believe that the [new] model's use of reward payments in exchange for receiving services inside the ACO network will be a powerful tool for engaging beneficiaries and incenting choices that lead to better health outcomes at a lower total cost."
Christopher Cheney is the CMO editor at HealthLeaders.