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The Advisory Board Company’s Perspective on CMS’s Next Generation ACO Announcement

January 12, 2016
by Mark Hagland
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Rob Lazerow of The Advisory Board Company shares his insights on the now-fully-unveiled Next Generation ACO program

On Monday, Jan. 11, the federal Centers for Medicare & Medicaid Services (CMS) fully unveiled the new Next Generation ACO program, revealing both the details of the program’s parameters, and the list of 21 accountable care organizations (ACOs) that had joined the program, which was officially fully launched on Jan. 1.

As noted in this publication’s report on the unveiling on Monday, the Next Generation ACO Program now joints the Pioneer ACO Program and the Medicare Shared Savings Program (MSSP) as programs that patient care organizations nationwide can join and participate in, around accountable care concepts and principles.

The Advisory Board Company, the Washington, D.C.-based research, technology, and consulting firm, on Tuesday provided some background information to Healthcare Informatics, for the purpose of contexting the recent developments at CMS. Prepared by Eric Cragun, senior director, health policy, and Adam Lustig, senior analyst, health policy, at The Advisory Board Company, the points provided by the organization include this statement, and the following takeaway points: “The commercial market is still not keeping pace with public-payer ACO programs, which are seeing an increasing number of providers accepting two-sided risk for penalties and bonuses.  Some early takeaways:


  • CMS’ newest two-sided risk model, the Next Generation ACO, attracted 21 participants for CY16 and most of these ACOs have experience in MSSP or the Pioneer Model.
  • Eight of the 21 ACOs in the Next Gen Model come from the Pioneer Model, where organizations were accustomed to payment under a two-sided risk arrangement. Seven Next Gen ACOs come from MSSP.
  • 147 ACOs that joined MSSP in 2012 or 2013 renewed participation in MSSP for 2016-2018. Those cohorts had a combined 220 ACOs when they started, so about two-thirds renewed participation in MSSP.
  • CMS announced that 22 ACOs have joined Track 2 or Track 3 for 2016-2018, but did not announce the breakdown between the two tracks; previously only three ACOs were in Track 2.
  • 100 ACOs joined MSSP for the first time in 2016. Net all of the changes plus some attrition, the total number of MSSP ACOs is up slightly in 2016, from 405 on Jan. 1, 2015 to 434 on Jan. 1, 2016.”


In addition, on Tuesday, Rob Lazerow, practice manager, Research and Insights, at The Advisory Board Company, spoke with HCI Editor-in-Chief Mark Hagland, to share his perspectives on the unveiling of the Next Generation ACO program, and the ongoing progress of all of CMS’s ACO programs. Below are excerpts from that interview.

What was your overall reaction to yesterday’s unveiling of the details and parameters of the Next Generation ACO Program yesterday?

When I think about that announcement, I actually zoom out and look at a number of announcements as well. Because Medicare shared also what 2016 would look like for their accountable care programs more generally. And I took away that providers do remain committed to accountable care and are participating in these programs. And overall, participation in these programs is increasing. And what we’re seeing now is that CMS is allowing a number of options, including track 1 of the MSSP, with shared savings but no downside risk; all the way to the full-risk option under the Next Generation ACO model. So providers have a range of options and are choosing how they want to participate. And we’re seeing more organizations now elevating the amount of risk they want to take. CMS had expected 15-20 to participate, so with 21 participating, we’re right on the money. And now 22 organizations have signed up for either track 2 or track 3, both involving downside risk, in the MSSP program, and at the end of last year, only two organizations were taking downside risk at the end of last year. Track 3 is brand new and involves higher risk, and higher reward.

It seems that in certain ways, the Pioneer ACO Program is teetering a bit right now, including through the loss of fully half of its participant organizations. Do you think that the creation of the Next Generation ACO Program is CMS’s answer to the problems that have beset Pioneer?

We need to remember that Pioneer was the first of the ACO programs to launch after the Affordable Care Act was launched, following the precursor, the physician group practice demonstration project. And of the 32 that signed up with Pioneer were in the demo or had had experience with population health. What we’re seeing in Pioneer is the challenges of figuring out the nuts and bolts of the payment model, and issues around benchmarking, and whether to be regional or national, and how to handle that; and some of those issues are in the MSSP, too. Now, as we’ve seen organizations exit the Pioneer model, it doesn’t mean they’re abandoning population health overall. We’ve seen some organizations moving to MSSP or Next Generation or working with commercial payers. So Pioneer was a starting place. And organizations are learning and branching out.

Are you worried at all about the Pioneer Program?

I think we have to keep in mind that Pioneer was an experiment from the Innovation Center, and was meant to help organizations learn how to contract with Medicare on population health, and they’re continuing to evolve from there. I’d be interested in CMS’s opinion on that.