The Evolution Of Medicare ACOs

The Centers for Medicare & Medicaid Services on Tuesday unveiled a new model of accountable care organization that offers larger financial risks and rewards, a test of whether stronger incentives can help health care providers deliver better quality and value.

The Patient Protection and Affordable Care Act (PPACA) created pathways for providers to become more accountable for their patients’ health care. One of these pathways, the Medicare Shared Savings Program, was intended to encourage the development of accountable care organizations (ACOs). In general terms, an ACO is a group of providers that work together to coordinate patient care and are rewarded if they lower their growth in health care costs while meeting quality standards.

The “Next Generation” model now joins two other types of ACOs — so-called Pioneers and those in the Medicare Shared Savings Program — and represents the boldest set of carrots and sticks that CMS has offered to move away from fee-for-service reimbursement. It’s also a contribution to new targets for tying pay to performance and nudging providers into alternative delivery models. But the approach is also a gamble, given that financial incentives in ACOs have so far had mixed results. In the Pioneer program, where participants take on more risk than those in the MSSP, only 19 of the 32 original ACOs remain. In the MSSP, participants are likely to get three extra years to share in savings without risking losses.

For the Next Generation approach, the first round of applications are due by June 1 and a second round will be due by June 1, 2016. CMS said it expects 15-20 ACOs to eventually participate and that more may be allowed “if resources are available and a compelling reason exists to do so.”

Participants will have a choice of two arrangements when it comes to the amount of financial risk they accept. There will be four different payment mechanisms, including traditional fee-for-service, supplemented fee-for-service, population-based pay and lump-sum capitation.

Beneficiaries served by doctors, hospitals and clinics in a participating ACO will retain the ability to visit other health care providers. But in order to encourage use of the ACOs, CMS said that it will make direct payments to beneficiaries who receive a minimum amount of care through an ACO — probably about $50 per year for those who get at least 50 percent of services through the Next Generation model.

Next Generation ACOs will also get a helping hand from relaxed restrictions on how care is delivered. For example, telemedicine services that provide diagnoses and prescriptions using videoconferencing will be exempted from requirements that patients be in rural areas and at an acceptable “originating site” when they receive their care.

Tuesday’s announcement included several documents with detailed information on how benchmark spending targets will be set, how risk and reimbursement will be structured and how savings will be calculated. Additional details will be supplied to applicants before signing of agreements, CMS said.

As with other ACOs, there may also be waivers from fraud and abuse laws involving kickbacks and referrals. But CMS said any such exemptions would be issued separately from Tuesday’s documents and that the waivers in Next Generation “could differ in scope or design from waivers granted for other programs or models.”


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Martin Milita

Martin Milita is a Senior Director at Duane Morris Government Strategies, LLC. Duane Morris Government Strategies (DMGS) supports the growth of organizations, companies, communities and economies through a suite of government and business consulting services. The firm offers a range of government relations and public affairs services, including lobbying, grant writing; development finance consulting, media relations management, grassroots campaigning and community outreach. Milita works at the firm’s Trenton and Newark New Jersey offices. Visit his blog at: Follow him on twitter: @MartinMilita1 BLOGROLL Martin Milita – Martin Milita :: Pinterest Martin Milita @ Twitter Martin Milita at Slideshare Martin Milita on Google+ Martin Milita Yola Site Martin Milita | Xing

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