The new Next Generation Accountable Care Organization (ACO) model improves upon other ACO models and allows for greater success for physicians, according to ACO experts.

“It’s a really good sign generally that CMS is willing and able to adapt to some of the major structural problems with the Medicare ACO model,” said Julian D. “Bo” Bobbitt Jr., a health law attorney in Raleigh, N.C. “Changing incentives to reward higher quality at lower cost and to align those is extraordinarily promising.”

The Next Generation ACO model offers predictable financial targets, enables providers and patients greater opportunities to coordinate care, and aims to attain the highest standards of care, according to a March 10 announcement from the Centers for Medicare & Medicaid Services. The new model means greater financial risks for doctors and hospitals in exchange for greater shared savings for high performance. To support the increased risk sharing, the new ACOs will have a stable, predictable benchmark and flexible payment options that support investments in care improvement infrastructure that provide high quality care to patients, CMS said in its release.

Like the Pioneer ACO Model and the Medicare Shared Savings Program, ACOs that successfully reduce the cost of care may keep some of the savings. But the next generation model uses a new formula to calculate savings targets that do not exclusively rely on historical performance. Physicians have criticized that older method as unfair to health providers who already deliver lower-cost care. The new formula will take into account regional and national efficiency, and ACOs that have already attained cost efficiency, compared with their regions, will receive a more favorable discount, according to CMS.

Beneficiaries, too, will have the chance to voluntarily align with the Next Generation ACO model by confirming their care relationship with specific ACO providers. Patients can also receive rewards, such as waived or reduced copays, for receiving their care from ACO physicians as well as coverage of skilled nursing care without prior hospitalization, and expanded coverage of telehealth and postdischarge home services. In any event, patients retain the freedom to seek services and providers of their choice.

Beneficiary incentives are a key contributor to successful care management, said Larry Kocot, a health law attorney in Washington.

“It’s really hard for a provider to be able to deliver coordinated care to a beneficiary if the beneficiary is not a full participant,” Mr. Kocot said in an interview. “In order for the beneficiary to be a full participant, [he or she] should for instance, be able to select [his or her] provider. This model will allow for that.”

Dr. Patrick Conway, chief medical officer at CMS, said the next generation ACO is a response to physicians’ feedback and requests.

“The ACO model responds to stakeholder requests for ... greater engagement of beneficiaries; a more predictable, prospective financial model; and the flexibility to utilize additional tools to coordinate care for beneficiaries,” he said in a statement.

CMS will accept ACOs into the next generation program through two rounds of applications in 2015 and 2016, with participation expected to last up to 5 years. Participants in the Medicare Shared Savings Program and the Pioneer ACO Model may apply, as well as all other groups that meet
eligibility requirements. CMS expects about 15-20 ACOs to participate in the Next Generation ACO Model.

Mr. Kocot notes that the new model will not be the best choice for physicians new to ACOs or for those in smaller communities, who cannot take on the extra risk.

“This is really limited to a small subset of providers who are able to accept a higher amount of risk,” he said in an interview. “Physician practices vary across the country; they’re not all homogeneous. It’s not going to be the option for all providers.”

The unveiling of the next generation ACO comes on the heels of an effort by the Obama administration to shift payments away from fee for service by having half of all Medicare dollars paid to doctors through alternative payment models by the end of 2018.

The new ACO model is a likely reflection of how other accountable care organizations will be structured in the future, notes Dr. Farzad Mostashari, cofounder and CEO of Aledade, an ACO consultancy. Dr. Mostashari is the former national coordinator for health information technology.

“It is a glimpse of what the whole program is going to look like in a few years’ time,” Dr. Mostashari said in an interview. “This is directionally, absolutely where the Medicare Shared Savings Program is headed.”

Those interested in applying to the next generation models in 2015 must submit a Letter of Intent by May 1 and an application by June 1. Second-round Letters of Intent and applications will be available in spring 2016. More information on the Next Generation model can be found on CMS’ Web page.

agallegos@frontlinemedcom.com

On Twitter @legal_med

Experts: New ACO model positive for physicians