The Next Generation ACO Model

The Centers for Medicare and Medicaid (CMS) recently announced the next ACO (Accountable Care Organization) venture in the release of its proposed “Next Generation ACO” initiative. It claims this initiative will create better opportunities for coordinated patient care and set higher standards for quality and safety. The Affordable Care Act has encouraged the formation of ACO entities through programs such as the Medicare Shared Savings Program, which launched in 2012 under the Affordable Care Act that ties quality targets with financial incentives, in an effort to focus on patient-centered care, quality improvement, and keeping a patient’s treatment closely linked. These targets, in turn, help facilitate the spread of information among providers and help better monitor chronic disease. This proposed “next generation” initiative builds off of the Pioneer ACO model, which was designed for organizations already following a care model comparable to an ACO in terms of financial risk and care coordination, but not yet officially labeled an “ACO.” Essentially, the Pioneer model was advertised as a “higher risk, higher reward” model that held potential for savings above and beyond what was possible via the Medicare Shared Savings Program. So how did the Pioneer ACO Model fare? The reviews are mixed.

As of September 2014, 19 of the original 32 enrolled participants remained in the program. After the first year of the program, the financial outcomes ranged from a gross loss of $9.31 million to a gross savings of $23.34 million. Thirteen organizations qualified for shared savings, one owed losses, and 18 did not save or lose. By the end of year two, 20 participant ACOs remained with a similar range of loss to savings. Despite the range of results, CMS clearly remains committed to this program and is taking things a step further in the creation of the Next Generation ACO project. According to CMS, this new model builds upon the experience from the Pioneer model and further increases the risk/reward schematic above and beyond what was offered in the Pioneer mode. Ultimately, the hope is that entities will be induced by the strong financial incentives offered with the continued end goal of increased efficiency, improved patient care quality, and better overall care management. CMS anticipates that anywhere from 15 to 20 entities will sign up for the new initiative. CMS is offering a wide variety of helpful tools to the entities that ultimately enroll in the program to assist in effective patient care management and coordination, including expanded coverage for telehealth, home services, and skilled nursing.

If the Pioneer model taught us anything, it seems as though some ACOs are better equipped to take on the increased risk than others. Despite the mixed results, CMS seems to believe that the ACO model is the key to controlling health care costs while maintaining high-quality metrics in the future. Hypothetically speaking, this may very well be the case, but the question is whether, in reality, this type of risk/reward model is feasible nationwide.

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