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Medicare Introduces New Kind of ACO

March 13, 2015

 

The Center for Medicare & Medicaid Services (CMS) is introducing a new type of accountable care organization – called a “Next Generation ACO” -- that expands upon the current shared-savings and pioneer models by establishing a more predictable revenue stream, creating financial incentives for consumers to select ACOs, and permitting ACOs greater financial risks and rewards.

 

The changes go into effect in January, 2016, and CMS expects about 15 to 20 ACOs of this type, drawn largely from providers experienced in coordinating care for patient populations.

 

Key Elements of Medicare’s “Next Generation Accountable Care Organizations:”

 

  1. Financial Risk/Rewards: The new ACOs would take on more financial risk for the cost of caring for a patient population in exchange for receiving greater financial rewards. This is beyond the degree of risk/reward now assumed by pioneer ACOs.
  2. Patient Incentives: Consumers would be able to join an ACO of their choosing and receive financial incentives for getting their health care through that organization. Currently, it is CMS that assigns consumers to ACOs, and consumers receive no financial incentives.
  3. Payment: Payment would still be made on a fee-for-service basis (FFS), but CMS would offer a selection of alternative payment mechanisms to enable a transition from FFS reimbursements to full capitation (in which the ACO would receive a set amount for all services provided to a patient population).
  4. Savings/Losses: CMS would adjustment the payment formulas to allow ACOs that already provide low-cost care to more easily realize financial gains through continued improvement. ACOs had expressed concern that existing formulas which factored-in past costs prevented high performers from benefitting from continued cost-improvement.
  5. Telehealth: The Next Generation ACOs would be given new tools to improve engagement with beneficiaries including greater use of home visits, telehealth services, and skilled nursing facilities. The American Telemedicine Association said that under the new model, Medicare telehealth services could be covered without regard to longstanding restrictions which have required a beneficiary to be located in a rural area and served at a health facility.