Understanding The Next Gen ACO Model

“Number Of ACOs Taking Downside Risk Doubles Under ‘Pathways To Success” was the headline of Seema Verma’s Health Affairs authored blog earlier this year. Seema Verma is the Administrator for the Centers for Medicare and Medicaid Services (CMS) and further back in December of 2018 she reported that “The Trump Administration overhauled the largest value-based payment program in fee-for-service Medicare—the Medicare Shared Savings Program (“Shared Savings Program” for short) for “Accountable Care Organizations” or ACOs”. 

ACOs are groups of doctors, hospitals, and other health care providers who voluntarily form partnerships to collaborate and share accountability for the quality and cost of care delivered to their patients. In “Original Medicare”, CMS generally attributes beneficiaries to ACOs based on their primary care provider’s affiliation with a Medicare ACO, but beneficiaries are free to seek services from any Medicare provider inside or outside of the ACO. CMS payments to ACOs incorporate financial incentives for lowering spending and meeting specified quality goals for their beneficiary population. These financial incentives—which can include shared savings or losses (bonuses or penalties)—are paid to or collected from the ACO, rather than the individual providers or facilities that may have treated each of the ACO’s beneficiaries. The programs for ACOs have evolved and the Trump Administration is intentionally shifting to more value-based payment models that offer providers greater upside and downside risk (bonuses and penalties).  

CMS has or had a few different types of programs for ACOs.

Pioneer ACO model

The Pioneer ACO model of care, which ended in 2016, included both financial risk and reward for all participating ACOs based on their overall Medicare spending relative to a benchmark amount and quality scores. The Pioneer Accountable Care Organization (ACO) Model was designed for health care organizations and providers that were already experienced in coordinating care for patients across care settings. It was designed to work in coordination with private payers by aligning provider incentives, which improved quality and health outcomes for patients across the ACO, and achieved cost savings for Medicare, employers and patients. The Pioneer ACO model was the framework for the CMS Next Generation ACO model, also referred to as Next Generation Accountable Care Organization or Next Gen ACO for short. 

MSSP Model

The MSSP is a permanent ACO program in traditional Medicare that provides Medicare ACO results like financial incentives for meeting or exceeding savings targets and quality goals. The MSSP program has multiple tracks that allow ACOs to choose between sharing in both savings and losses, or just savings. These are: Track 1, Track 1+, Track 2, and Track 3. Each track has increasing levels of upside and downside risk.

Advance Payment ACO Model

This model was formed in 2011 and ended in 2017. In response to input from stakeholders received on the proposed rule for the Shared Savings Program, and the concerns of some providers about their lack of ready access to the capital needed to invest in infrastructure and staff for care coordination this model was formed. The Advance Payment ACO Model was designed to help smaller ACOs with less access to capital participate in the Shared Savings Program by providing up-front payments to ACOs to support infrastructure development and operations, particularly among smaller and/or rural providers. Some former Advance Payment ACOs remain in the MSSP program. 

Next Generation ACO Model

Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program requiring both upside and downside financial risk. Downside financial risk occurs in arrangements when the ACO is paid a fixed amount of money and if there is over-utilization, poor resource management or quality issues then the group will have a negative financial consequence or penalty. Per CMS “the Next Generation ACO Model or Next Gen ACO offers an exciting opportunity in accountable care—one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.”  

The goal of the Next Gen ACO Model is to test whether strong financial incentives for ACOs, coupled with tools to support better patient engagement and care management, can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries. Verma had concluded that the Next Generation ACO results have been beneficial in reducing spending in 2016 and 2017. However, the shared savings payouts (incentives to Next Generation ACO participation agreement members) significantly offset the cost savings to Medicare. Therefore, in the future, CMS is going to emphasize “strong and targeted incentives for lower spending in value-based models: Savings tend to increase as health care providers take on more risk, but even high levels of risk do not guarantee that a model will result in overall savings.”

The Next Generation ACO model has a goal of improving the accuracy of their benchmarks so that they reward “true changes” and are not instead rewarding patterns of care existing in certain geographic areas. As the Next Generation ACO model enters its fifth and final year of evaluation it will be interesting to learn how the ACO models will continue to evolve. For sure, CMS will continue to innovate with value-based compensation programs for its ACOs that create incentive plans that reward high quality and cost effective care models. CMS has a stated goal of deploying a variety of approaches, which includes ACO programs like Next Gen ACO designed to reduce spending while improving quality in order to put the fee-for-service Medicare program on a sustainable path.

If you’re a risk bearing ACO looking to succeed in the transformation to value-based care delivery models, ForeSee Medical is a specialized software platform for accurate Medicare risk adjustment. Through proprietary clinical algorithms and natural language processing, ForeSee Medical optimizes HCC coding, empowering providers to positively influence health outcomes.

Blog by: The ForeSee Medical Team