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BREAKING NEWS: CMS Creates New “Next Generation ACO Model”

March 10, 2015
by Mark Hagland and Gabriel Perna
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On March 10, HHS/CMS announced the creation of a new accountable care payment and delivery vehicle, the “Next Generation ACO Model”

The U.S. Department of Health and Human Services announced on March 10 that the Centers for Medicare & Medicaid Services (CMS) had launched a new accountable care organization (ACO) initiative, creating a new vehicle called the Next Generation ACO Model. The announcement came via The CMS Blog, and was authored by Patrick Conway, M.D., Deputy Administrator for Innovation and Quality and Chief Medical Officer for CMS.

Here is the text of the announcement:

On March 10, the U.S. Department of Health and Human Services launched a new Accountable Care Organization (ACO) initiative from the Centers for Medicare & Medicaid Services (CMS) Innovation Center known as the Next Generation ACO Model. This model builds on the successes of earlier ACO models, such as the Pioneer ACO Model, and further enables innovation by providers to improve care for patients. Made possible by the Affordable Care Act, ACOs encourage quality improvement and care coordination to help improve our health care system. ACOs are a critical part of achieving the Department’s goals of delivery system reform nationally – aimed at better care, smarter spending and healthier people.

The Next Generation ACO Model is one of many innovative payment and care delivery models developed by the CMS Innovation Center. These models are designed to set clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers based on the quality, rather than the quantity of care they provide to patients.

Building upon experiences from the Pioneer ACO Model and the Medicare Shared Savings Program, the Next Generation ACO Model offers a new opportunity in accountable care — one that sets more predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality of care.

ACOs in the Next Generation ACO Model will take on greater financial risk than those in current Medicare ACO initiatives, while also potentially sharing in a greater portion of savings. To support increased risk, ACOs will have a stable, predictable benchmark and flexible payment options that support ACO investments in care improvement infrastructure to provide high quality care to patients. These changes are responsive to feedback from external stakeholders.

The Next Generation ACO Model encourages greater coordination and closer care relationships between ACO providers/suppliers and beneficiaries by enhancing services that beneficiaries can receive from participating ACOs. ACOs will have a number of tools available to enhance the management of care for their beneficiaries. These include additional coverage of telehealth and post-discharge home services, coverage of skilled nursing care without prior hospitalization, and reward payments to beneficiaries for receiving care from ACOs.

This ACO model provides for greater engagement of beneficiaries, a more predictable, prospective financial model, and more tools to coordinate care for beneficiaries.

For more information on the Next Generation ACO model, please visit the Next Generation ACO webpage.”

Here is a link to the Next Generation ACO webpage.

Shortly after the announcement, the Charlotte-based Premier healthcare alliance released a statement, attributed to Blair Childs, senior vice president of public affairs at Premier, stating that “Members of the Premier healthcare alliance strongly support well-designed alternative payment models.  We are eager to begin working with our members to assess the Next Generation ACO Model. Today’s announcement,” the statement said, “gives healthcare providers another Medicare payment option with substantially greater flexibility to provide innovative, high quality care to a defined group of beneficiaries.”

The Premier statement went on to say, “We believe it is extremely important for CMS to continue to provide a range of options for providers to test different payment models and organizational structures in an accountable care environment. With this announcement, providers have even more choices, which will enable the market to both mature and evolve.”

The College of Health Information Management Executives, an Ann Arbor, Mich.-based group, added their two cents. CEO Russell Branzell said this in a statement: "CHIME welcomes CMS' announcement regarding a new ACO model, and applaud the agency for continuing to evolve their strategy to move US healthcare away from fee-for-service reimbursement. The new model rightfully opens to the door to additional coverage of telehealth and telemedicine services, and allows both public and private sector stakeholders to advance their learnings.

Health IT will continue to be an essential underpinning of accountable care, regardless of the model and the amount of risk shared by payers and providers. By enabling the use of telehealth and by asking a host of EHR-related questions in the application form, CMS is signaling its intent to build upon the IT foundations laid over the past five years."

Healthcare Informatics will continue to update its readers on new developments in this emerging story.