Provider Groups Want to Make Next Generation ACOs Permanent

May 14, 2019 - Leading provider groups are asking HHS to make the Next Generation accountable care organization (ACO) model a permanent part of Medicare’s largest ACO program: the Medicare Shared Savings Program (MSSP).

In a letter to HHS Secretary Alex Azar and CMS Administrator Seema Verma, the National Association of ACOs (NAACOS), America’s Physician Group (APG), and Premier are calling on the HHS Secretary to use his authority to certify CMS Innovation Center demonstrations as permanent programs in Medicare if the model can reduce costs and improve quality.

The first-year evaluation report of the Next Generation model shows that participating ACOs generated nearly $62 million in net savings to Medicare while slightly improving care quality through fewer acute care hospital stays and more annual wellness visits.

“Evidence shows the Next Gen model has achieved both the spending reduction and quality improvement criteria needed to be certified as a permanent Medicare program,” the letter states.

Currently, the Next Generation model includes 51 ACOs that care for nearly 2 million Medicare beneficiates. However, the program that launched in 2016 is only a five-year demonstration unless the HHS Secretary chooses to make the program a permanent fixture like he did the Pioneer ACO model, the provider groups explain.

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CMS launched the Pioneer ACO model in 2012 with 32 ACOs. At the end of the third performance period in 2015, the CMS Office of the Actuary certified that the Pioneer ACO model reduced net Medicare spending after evidence showed that the model produced two-year savings to Medicare of $384 million.

CMS later created Track 3 of the MSSP after the Pioneer model. The federal agency has also expanded the Innovation Center’s Medicare Diabetes Prevention Program after the model demonstrated quantifiable savings.

Making the Next Generation model a permanent part of the MSSP would add “a valuable option,” the three groups state.

“The Enhanced Track has substantial risk from the Basic Track, but Next Gen facilitates an intermediate step between Pathways to Success and the new Direct Contracting Model,” they continue in the letter.

CMS recently announced the Primary Cares Initiative, which offers providers the opportunity to engage in direct contracting. Through direct contracting, CMS will pay ACOs and other healthcare organizations with value-based reimbursement experience capitated or partially capitated population-based payments to test whether flexible, performance-based payments can improve primary care.

READ MORE: For Ongoing ACO Shared Savings, Look Outside Inpatient, Primary Care

The direct contracting model is built on the successes of the Next Generation model, according to CMS. So, the Next Generation model can help providers interested in directing contracting to prepare for the risk-based alternative payment model, the three groups explain.

“The groups ask HHS to certify the Next Gen program as soon as possible so those ACOs can have time to evaluate their participation decisions for the new models or choose to remain in the existing Next Gen Model under MSSP,” the groups write.

While the leading provider groups advocated for an expansion of the Next Generation model, they also point out that the ACO program could benefit some several improvements, including an updated risk adjustment methodology. The groups advise CMS to use a risk adjustment approach similar to the one used in Medicare Advantage in which risk scores are updated annually.

“Accurate risk adjustment removes or minimizes differences in health and other risk factors that impact performance but may be outside the ACO’s control,” the letter states. “With an aging population that generally faces worsening health conditions over time, it is unreasonable – if not impossible – for ACOs to maintain the same risk scores year over year.”

Additionally, the groups recommend that CMS expand payment capitation within the Next Generation model. The model currently uses an all-inclusive population-based payment option to reduce the role of fee-for-service and allow ACOs to negotiate provider contracts.

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However, the all-inclusive population-based payment (AIPBP) option is not true capitation, the groups argue in the letter.

“The AIPBP prospectively pays providers an estimation of total spending based on historical utilization and reconciles payments against claims,” they write. “The reconciliation against spend limits ACOs’ ability to develop payment arrangements that are not based on the underlying FFS system. While the AIPBP is a step to help ACOs gain experience with capitation-like approaches, some ACOs are currently prepared to accept full financial risk for all or portions of their assigned Medicare population.”

On top of improved risk adjustment and capitated payment options, the groups also advise CMS to:

• Address alternative payment model overlap by giving precedence to models that aim to reduce total costs of care, like Next Generation ACOs
• Implement a tiered benchmarking methodology that increases benchmarks for low-cost regions and decreases for high-cost regions
• Permit Next Generation ACOs to tailor benefits to incentivize care for certain conditions and populations impacted by social determinants of health
• Allow Next Generation ACOs to develop preferred provider networks and offer discounts to beneficiaries for using providers in the network

“We support HHS’s efforts to transform healthcare payment and delivery systems to one that better rewards value and incentivizes quality, well-coordinated care,” the letter concludes. “We further appreciate the opportunity to provide feedback on the Next Generation ACO Model. Since its start in 2016, the program has been a beacon of success. We encourage you to capitalize on the opportunity to both make the Next Gen program a permanent option for ACOs while making adjustments to improve upon the impressive results the program has already delivered.”