Managed Care Medicare Supply of Medical Services

The Next Generation ACO

Medicare currently has two Accountable Care Organizations (ACOs)–the more popular Medicare Shared Savings Program (MSSP) and the Pioneer ACO program. However, these ACOs have generated only limited cost savings. Only 11 of 23 Pioneer ACOs and 58 of 220 MSSP participants generated cost savings.

To address some provider concerns and due to the limited cost savings generated, CMS last week announced what they are calling the Next Generation ACO.  CMS only expects 15 to 20 organizations to apply for this program.

The Next Generation ACOs will differ from the current models as they rely on fixed benchmarks (known by providers before the start of the year) rather than rolling benchmarks based on an ACO’s historical expenditures.  More importantly, Next Generation ACOs will be able to select from a variety of payment mechanisms “…to enable a graduation from fee-for-service (FFS) reimbursements to capitation [emphasis added].”  By year 2 of the program (2017), these new ACOs will have the option to accept capitated payment. Other differences include:

  • Greater access to home visits, telehealth services, and skilled nursing facilities;
  • (2) opportunities to receive a reward payment for receiving care from 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.

CMS claims that “Beneficiaries may receive a reward for receiving the majority of their care from ACO providers, but are not penalized in any way for seeing non-ACO providers.” However, not receiving a reward is in essence a penalty. Additionally, if these Next Generation ACOs become popular, setting a capitated rate administratively becomes more difficult as fewer and fewer people will be using traditional fee-for-service Medicare.

Applications for Next Generation ACOs are due January 1, 2016. Interested?

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