For Rural ACOs, New Primary Care Model From CMS Offers Much-Needed Financial Help


CMS recently introduced a new ACO model designed to ease the cost of setup for low-revenue ACOs focusing on primary care. The ACO Primary Care (PC) Flex Model will launch on New Year’s Day 2025.

To provider organizations, the Change Healthcare hack in February was a painful reminder of a lesson learned during the first year of the COVID-19 pandemic: A disruption in revenue flow can lead to financial disaster or even closure.

Many smaller hospitals and medical offices have struggled to get paid since the ransomware attack shut down Change’s billing and payment system. Similarly, provider organizations that relied heavily or even solely on fee-for-service (FFS) in 2020, but, as a result of the COVID pandemic, could not treat patients and, therefore, not get paid.

Clearly, FFS has its flaws, which have given rise to alternative payment models such as value-based care (VBC), along with efforts by CMS to promote accountable care organizations (ACOs) that prioritize patient outcomes and cost controls over volume of service.

CMS recently introduced a new ACO model designed to ease the cost of setup for low-revenue ACOs focusing on primary care. The ACO Primary Care (PC) Flex Model will launch on New Year’s Day 2025.

The PC Flex Model will provide qualifying ACOs with one-time advanced Medicare Shared Savings Program (MSSP) payments of $250,000 intended to help providers with the costs of forming an ACO, as well as the ongoing administrative costs associated with program participation, CMS said in a news release.

Monthly prospective payments under the ACO Primary Care Flex Model would replace Medicare FFS reimbursements for primary care. In addition to providing financial help to low-revenue ACOs – which comprise roughly 40% of all ACOs – the new program is designed to encourage tailored patient care and a focus on health equity, according to CMS.

The model will test whether improved payment for primary care enables ACOs and their primary care providers to utilize more innovative, proactive, team-based, person-centered approaches to care that positively impact health outcomes, quality, and costs of care.

Financial assistance for rural providers

When providers are reimbursed for services rendered rather than on outcomes or efficiency, rural provider organizations are especially vulnerable to revenue loss when the FFS faucet is shut off, as during the pandemic.

Of the 104 rural hospitals that have closed since 2005, 37 shut their doors permanently after 2020. Further, many of the surviving facilities are still struggling; the Center for Healthcare Quality and Payment Reform estimates that 30% of all rural hospitals in the U.S. are at risk of going out of business soon.

Hospitals and health systems can’t serve communities if they go bankrupt. By providing low-income ACOs with $250,000 in upfront payments and an ongoing monthly stipend, the ACO PC Flex Model helps these provider organizations deliver quality care to members of their communities, many of whom struggle with health equity issues due to social determinants of health (SDoH), such as transportation and housing challenges.

Supporting coordinated care

The foundational premise of ACOs is to provide care efficiently, effectively, and appropriately, to balance clinical effectiveness with financial responsibility. As with all VBC models, reimbursement is based not on how many times a patient has visited a provider, but on outcomes and cost savings.

ACOs also must ensure smooth transitions in care between primary and specialty providers. A significant portion of expenditures under MSSP is driven by specialists who treat individuals with chronic health issues like cancer, diabetes, and heart disease. Underserved populations, such as Americans living in rural areas, are highly susceptible to chronic diseases, which (along with mental illness) account for 90% of healthcare costs in the U.S., the CDC estimates.

The ACO PC Flex Model affords participants the ability to coordinate care with specialists, including behavioral health professionals. Indeed, depression and anxiety can contribute to chronic diseases through coping mechanisms, such as smoking and excessive alcohol consumption. Funding through the PC Flex Model could support education and treatment services for mental health issues.

By using a primary care model that reimburses participants on a prospective basis – that is, a predetermined, fixed amount – ACOs have predictable revenue. For low-income ACOs – particularly those struggling under FFS, not to mention all ACOs impacted by the Change Healthcare hack – a steady, predictable revenue stream can spell the difference between continuing to serve their communities and closing forever.

How to prepare

New and renewing ACOs that want to be part of the program must first apply to the Shared Savings Program. The application window for Shared Savings runs from May 20 to June 17; CMS plans to release the ACO PC Flex Model Request for Applications (RFA) in May, with applications tentatively due in early August.

That’s not much time. Interested organizations should quickly assess their eligibility for this new model. This may require working with a partner on the assessment.

Should an organization determine that it is eligible for the PC Flex Model, it should gauge the potential impact on its practice. For low-income rural ACOs, for example, $250,000 in up-front CMS money could allow them to add services they previously couldn’t afford, such as care management. Providers should really analyze what types of enhanced services would most benefit the population they serve.

It is vital, however, that organizations plan and strategize how they’ll leverage the Flex ACO funding before they receive it. Otherwise, they may fail to optimize its value.

Ideally, the ACO PC Flex Model not only can help existing low-revenue ACOs serving rural America, but also will inspire the creation of new rural ACOs and fund desperately needed behavioral health services.

Lynn Carroll is the chief operating officer of HSBlox and Brian Norris, vice president and managing director, Strategic Consulting at MedeAnalytics.

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