Next Gen. ACO Model – A Big Step Up From MSSP

Accountable care organizations, ever since they were brought on the frontlines have been promoting the delivery of accountable care all over the country and have been aiming to find a way that best aligns the organization’s performance with improvement measures and pursue the Triple Aim: improving the quality of care, with enhanced patient experience, while containing costs.

Centers for Medicare and Medicaid Services (CMS), with the impetus to change the way how providers are paid and to ensure the delivery of value-based care, introduced several payment models. Then with the implementation MACRA, the Department of Health and Human Services’ announcement to link 50% of all Medicare payments to Alternative Payment Models (APMs) by 2018, many provider organizations have begun to strongly consider taking the plunge into APMs.

Accountable Care Organizations and Past Models

Up until December 31st, 2016, ACOs came under two basic models: Pioneer, and the Medicare Shared Savings Program (MSSP). The Pioneer model had concluded by the end of 2016, and over the years, several issues have emerged with MSSP too:   

• The higher the tier, the more risk an organization takes on exceeding benchmark goals. The higher tiers have more potential reward offerings as compensation for this risk where savings are split between Medicare and the ACO, which are later shared among various providers.
• The shared savings are based on an organization’s historical spending. Due to this, efficient organizations don’t have as much ability to be rewarded as an ACO which has had a poor past performance because their incremental performance will be greater.
• Incomplete or fragmented patient attribution makes it difficult for administrators to find details about the patient population, their care quality, and expenses associated.

What is Next Generation ACO Model?

The latest model by CMS called the Next Generation ACO model was rolled out in March 2015, improving the basic ACO model, allowing better care for the patients, and offering better success opportunities for physicians. The Next Generation ACO Model is a new and improved model that aims to provide further opportunities for:

• Coordinating care
• Stable and predictable benchmarks
• Appropriate and consistent fiscal targets

The Next Generation ACO model, which began from January 1st, 2016 will be recognized as an APM and begins voluntary alignment in 2017. This model, built on the foundations of the Pioneer as well as the MSSP model is a clear indication that CMS is committed to shifting from fee-for-service models towards APMs by the end of 2018.

How will Next Generation ACO Model bring changes in health care?

The Next Generation ACO model has financial arrangements offering a higher level of risks and rewards than either Pioneer or MSSP and uses redefined benchmarking methods promoting an improvement in cost containment compared to the older models.

Outlined here are the key features of the Next Generation model:

• ACOs have to maintain at least 10,000 aligned Medicare beneficiaries to stay eligible for payments.
• Incorporates Hierarchical Condition Categories (HCC) based risk scoring.
• Risk score changes are capped at +/- 3% from baseline to performance year.
• 80% or 100% savings or loss, subject to 2% reduction.
• Maximum savings or loss can be 15% of the target.

Beneficiaries are Rewarded: One of the prime features available for ACOs is to provide rewards to beneficiaries that receive care from the ACO. This may make it easier for the providers that are participating to exert more control over the costs and the quality of care provided to patients and ensure success in the program.

Predictable Benchmarks: Moreover, to encourage ACOs to take on more risk, the model offers stable, predictable benchmarks along with flexible payment options that provide support for ACO investments to take on new initiatives for care improvement and delivering high-quality care to patients in an accountable care environment.

Potential Shortcomings

There are some challenges and shortcomings that providers may encounter when enrolling or participating in the Next Generation ACO model:

• Demonstrating records: The inability to demonstrate records of maintaining populations and assuming downside risk. Only a small number of ACOs would be able to demonstrate their competencies by being a participant in a downside commercial risk arrangement under Pioneer or MSSP and the Next Generation model will be much of the same.
• Financial Security: The Next Generation model requires ACOs to establish a substantial financial security to counter potential losses and refunds. ACOs need to have significant capital to gain affordable letters of credit, large reserve funds, escrow etc.

The Road to Value-Based Care

The Next Generation ACO model is the promise of a greater value-based care ecosystem and bringing focus on the quality of care provided. The model will not only encourage ACOs to work towards controlling inherent risks and managing populations, but also focus on creating future-ready healthcare.

How many ACOs are ready to embrace and excel in it remains to be seen, but it sure looks like the model is poised to take healthcare to a whole another level by adding value to older programs.

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