HHS launches Next Generation ACO model

A new, “next generation” accountable care organization (ACO) model that encourages greater coordination between providers and beneficiaries has been launched by the U.S. Department of Health and Human Services (HHS).

The new model is linked to HHS’ intention, announced on January 26, to shift 50% of provider payments into alternative payment arrangements such as ACOs by 2018. ACOs are provider-led groups in which payments are linked to quality improvements for a defined population. If providers reduce expected spending while meeting quality metrics, they receive a portion of the savings. In certain models, they are also liable for losses if benchmarks aren’t met.

The “Next Generation” ACO model carries more risk for participants than HHS’ Shared Savings ACO and Pioneer ACO, but the potential rewards are also higher.

“The Next Generation ACO Model is one of many innovative payment and care delivery models created under the Affordable Care Act, and is an important step towards advancing models of care that reward value over volume in care delivery,” said HHS Secretary Sylvia M. Burwell. “This model is part of our larger effort 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 give patients.”

RELATED: Top stakeholders form task force to accelerate shift to value-based care

According to the Centers for Medicare and Medicaid Services (CMS), the model will consist of three initial performance years and two optional one-year extensions, two risk tracks and four payment mechanisms. One track will put the ACOs at near 100% risk. Patients enrolled in the model will have more control over their healthcare, see no change in benefits, and “keep their freedom” to see any Medicare provider.

RELATED: CMS proposes changes to Shared Savings ACO model

“This ACO model responds to stakeholder requests for the next stage of the ACO model that enables greater engagement of beneficiaries, a more predictable, prospective financial model, and the flexibility to utilize additional tools to coordinate care for beneficiaries,” said Patrick Conway, deputy administrator for Innovation and Quality and chief medical officer for CMS.

CMS said it expects 15 to 20 participants from a variety of provider organization types across the country to participate in the new model. There is a minimum threshold of 10,000 beneficiaries for membership. Those wishing to join the first round of the Next Generation ACO model must send a Letter of Intent by May 1, 2015, and an application nu June 1, 2015. Visit the Next Generation ACO website for details.

Subscribe to Managed Healthcare Executive for news and in-depth analysis of industry developments.