Public Policy

Medicare Develops Next Generation Accountable Care Organization Model


The Centers for Medicare and Medicaid Services (CMS) Innovation Center recently announced the development of a new accountable care organization (ACO) model—the Next Generation ACO—that hopes to move closer to the goal of efficient, coordinated care for Medicare beneficiaries.

“This ACO model provides for greater engagement of beneficiaries, a more predictable, prospective financial model, and more tools to coordinate care for beneficiaries,” writes Patrick Conway, MD, MSc, chief medical officer and deputy administrator for innovation and quality at CMS, in a blog post announcing the Next Generation ACO.

ACOs align hospitals, physicians, nursing facilities, and other critical healthcare providers as a sort of one-stop shop for seamless patient care across settings and among providers. By bringing together the full range of services, ACOs aim to provide higher quality coordinated care while reducing costs for patients and Medicare.

Since the passage of the Affordable Care Act, CMS has overseen two distinct tracks for ACOs: the Medicare Shared Savings Program and the Pioneer ACO. The Shared Savings Program was a first step in moving toward streamlined healthcare delivery systems while incentivizing care coordination across settings. Pioneer ACOs, on the other hand, were designed as a test for more aggressive reforms that promised higher potential rewards in exchange for higher risk, while moving participants toward population-based payments.

The Next Generation ACO builds off of the Pioneer and Shared Savings Program ACO models to test whether the fundamental concepts behind an ACO—improving care and reducing costs—can be achieved using stronger financial incentives. Notably, the Next Generation ACO establishes stable, prospective targets for benchmarking expenditures and offers an array of payment mechanisms, including capitation.

ACO goals read like a laundry list of hospitalist goals and practice, such as reducing readmissions, maximizing efficiency, improving care transitions, and reducing length of stay.

Participants of the Next Generation ACO model will have new tools to help coordinate patient care, including expanded coverage for telehealth and home health services and increased access for skilled nursing facility coverage without prior hospitalizations. Because the Next Generation ACO model comes from the CMS Innovation Center, it’s specifically designed to help policymakers evaluate the impact of reimbursement and system changes with an eye toward scalability. The knowledge gained from this model could help structure the Medicare payment system of tomorrow.

Hospitalists have long been interested in the impact of ACOs on their practices, with good reason. Hospitals form an integral part of an ACO, and hospitalists serve critical roles within their hospitals. ACO goals read like a laundry list of hospitalist goals and practice, such as reducing readmissions, maximizing efficiency, improving care transitions, and reducing length of stay. The Next Generation ACO model offers the potential to further capitalize on the expertise of hospitalists as the healthcare system explores ways to move away from traditional fee-for-service payments.

The way in which Medicare pays providers is evolving rapidly as CMS seeks to reimburse for the quality rather than the quantity of services provided to beneficiaries. Over the next five years, CMS has set aggressive targets for transitioning fee-for-service payments into value-based payment systems; the Next Generation ACO is one tool for helping to push that goal onward.

Joshua Lapps is SHM’s manager of government relations.

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