Next Generation ACOs Offer Higher Risk But Greater Rewards

The Centers for Medicare and Medicaid Services recently released the names of 21 organizations selected to participate in its Next Generation Accountable Care Organization (ACO) Model. Those selected for this pilot program have experience in accountable care with the Medicare Shared Savings Program.

The Next Generation ACOs are part of the government’s plan to transition from paying providers on a fee-for-service schedule to a pay-for-performance system. Under the Affordable Care Act, by the end of 2016, the US Department of Health and Human Services (HHS) expects 30 percent of all Medicare payments to come from ACOs. That expectation will be bumped up to 50 percent by 2018.

The Next Generation ACOs differ from the Pioneer ACO—which at its start had 32 participants with very mixed results—in several ways. Next Generation participants can choose to accept risk in two ways. Under option one, providers can share in 80 percent of the savings or losses based on their quality and cost-control efforts, or one that involves 100 percent risk, according to a CMS fact sheet. Under the Pioneer plan, providers had the option of five payment arrangements, which share savings and losses of up to 60-75 percent; savings and losses sharing rate varies based on quality score. Next Generation ACOs can choose to be paid via fee-for-service or some type of mixed value-based payment. ACOs that stick around for the second year would receive monthly lump-sum payments for each covered Medicare member.

Additionally, Next Generation participants that demonstrate savings will have the ability to provide Medicare beneficiaries with benefits such as a Three Day Skilled Nursing Facility Waiver. This would allow ACOs and nursing homes to waive the Medicare rule requiring a three-day stay in an inpatient hospital, acute-care hospital, or critical access hospital (CAH) prior to admission to a skilled nursing facility. Other enhanced benefits include a telehealth expansion waiver and a post-discharge home visit waiver.

Click here for more information on Next Generation ACOs and links to additional FAQs.

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