Medicare accountable care organizations now can enjoy greater financial rewards and greater flexibility under rules just finalized by the Centers for Medicare & Medicaid Services (CMS).
The rules, which were proposed in December, 2014, and go into effect August 3, 2015, adjust the Medicare shared-savings program which now serves some 7 million beneficiaries through more than 400 ACOs. Among the changes:
- A longer period for ACOs to share in financial savings before having to also share in losses.
Currently, shared-savings ACOs can only operate for three years before they must begin sharing in losses as well. The new rule permits ACOs to participate for one additional three-year period before making this transition—six years total.
- Greater potential savings if ACOs take on greater financial risk for caring for patients.
The new rule creates a “Track 3” ACO that allows higher rates of shared savings if ACOs also agree to share in a greater percentage of any losses. Such ACOs would be permitted to share in up to 75% of savings if they were also willing to share in up to 75% of losses.
- Greater opportunity for providers already achieving high levels of quality and cost-savings to benefit from continued improvement.
CMS is changing the way it determines the historical costs that it uses for calculating how much an ACO improves, thus allowing a fairer comparison for already high-achieving providers.
These changes reflect the CMS commitment to link a much greater percentage of Medicare payments to provider performance in quality improvement and cost savings. Earlier this year, it said that by 2018, some 50% of payments would be made in this way via alternative payment models such as ACOs.
Toward this end, CMS also introduced a separate type of ACO model in March called the Next Generation ACO. It will allow providers to take on even more financial risk than Pioneer or Track 3 ACOs, including full capitation, in which the ACO accepts a set payment to cover all services for a specific patient population. Next Generation ACOs will begin in January, 2016. Click for related article.