Next Generation ACO Model Launches in 2016

Twenty-one organizations launched the Next Generation Accountable Care Organization (NGACO) Model in January, according to CMS. These organizations “have significant experience coordinating care for populations of patients through initiatives such as the Medicare Shared Savings Program and the Pioneer ACO Model,” CMS wrote in its fact sheet.


The new model differs from previous ACO models by including a prospective rather than retrospective benchmark, beneficiary choice about being assigned to the NGACO, beneficiary incentives for seeking care from member providers and increased availability of telehealth and care coordination services. (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)


CMS noted the NGACO Model’s core principles:

  • Protect original Medicare beneficiaries’ freedom to seek the services and providers of their choice
  • Engage beneficiaries in their care through benefit enhancements designed to improve the patient experience and reward seeking care from ACOs
  • Create a financial model with long-term sustainability
  • Utilize a prospectively-set benchmark that: (1) rewards quality; (2) rewards both improvement and attainment of efficiency; and (3) ultimately transitions away from an ACO’s recent expenditures when setting and updating the benchmark
  • Mitigate fluctuations in aligned beneficiary populations and respect beneficiary preferences by supplementing a prospective claims-based alignment process with a voluntary process
  • Smooth ACO cash flow and support investment in care improvement capabilities through alternative payment mechanisms

(“Next Generation Accountable Care Organization Model (NGACO Model),” CMS Fact Sheet, January 11, 2016)


Participants in the NGACO model can take on up to 100 percent financial risk—more than in other Medicare ACOs. Increased financial risk allows for a greater opportunity to share in the model’s savings through better care coordination and care management.


The Healthcare Financial Management Association noted that, “Establishing prospective budgets—in advance of the performance year—would allow the ACOs to plan and manage care around these financial targets from the outset. Also available are flexible payment options, such as infrastructure payments that support ACO investments in care.” (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)


Analysts note that the new program will give providers stronger financial incentives and tools to engage beneficiaries and provide care outside the customary requirements of Medicare fee-for-service. Medicare beneficiaries enrolled in NGACOs will have enhanced access to skilled nursing facilities, which will not require Medicare’s customary three-day inpatient stay.


Investment Model

CMS also announced that 39 Medicare Shared Savings Program (MSSP) ACOs will participate in the ACO Investment Model (AIM), bringing the number of participants to 41. The new model will provide prepaid shared savings to encourage new ACOs to form in rural and underserved areas and to encourage existing MSSP ACOs to transition to a performance-based risk arrangement. (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)


Growth of ACOs

CMS reported 100 new MSSP ACOs and Pioneer ACOs, which also launched on January 1. Nearly 150 renewed their participation. The increase, including the NGACOs, means approximately 15,000 more physicians will be participating in ACOs in 2016.


However, data indicate one-third of the 220 MSSP ACOs launched in 2012 and 2013 have left the program.


To read the full CMS fact sheet, click here.




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