Three ACOs drop out of Next Generation model

Eighteen ACOs remain in the program

Three organizations have dropped out of CMS's Next Generation Accountable Care Organization (ACO) Model since it launched in January.

CMS announces Next Generation ACO participants

CMS unveiled the Next Generation ACO model in March 2015. The program uses a combination of fee-for-service and capitated payments, including one risk track that passes along almost full risk.

In addition to placing more risk on the organizations, the model also allows providers more freedom to use telemedicine and home visits.

Patients voluntarily sign up to participate in Next Generation ACOs. In exchange, the patients pay reduced or zero copayments for certain services, such as primary care visits.

CMS in January announced that 21 organizations initially would participate in the Next Generation model. CMS will announce the next round of participants in August.

Three organizations withdraw

Since January, three organizations have dropped out of the program:

  • Heritage California ACO in Northridge, California;
  • River Health ACO in Harrisburg, Pennsylvania; and
  • WakeMed Key Community Care in Raleigh, North Carolina.

According to Modern Healthcare, Next Generation ACO participants had until April 1 to withdraw from the program without facing penalties.

River Health ACO—a partnership among PinnacleHealth, Susquehanna Health, and other providers located in central Pennsylvania—left the program in February after projecting that the ACO likely would not be able to lower costs "to meet the current target set by CMS."

WakeMed Key Community Care, a collaboration between WakeMed Health & Hospitals and local physicians, withdrew "after evaluating financial and operational metrics." The organization said, "As an ACO with a very low benchmark, we are much more susceptible to any variability."

A spokesperson for Heritage California ACO did not explain the organization's reason for dropping out of the program this year, but said it "will be fully participating in" the Next Generation ACO program for "calendar year 2017."


In response to the ACOs' departure, a CMS spokesperson said, "ACOs make their own business decisions regarding participation in ACO initiatives and may determine that a certain model is no longer the best fit for their organizational priorities."

J. Michael McWilliams, a health policy professor at Harvard University Medical School who has studied ACOs, told Modern Healthcare it makes sense that ACOs are reassessing their participation. McWilliams explained, "After you apply and start to look at the data that comes back and your cost targets, it's natural to say, 'Are we sure we want to take this leap?'" or '"Do we think we have the organizational capability and time to be successful in this program?'"

McWilliams added that "ACOs with spending below the regional average will find" Medicare's Sharing Savings Program (MSSP) "far more attractive than" the Next Generation model because MSSP involves less organizational risk (Herman, Modern Healthcare, 7/15; Morse, Healthcare Finance News, 7/18).

The field guide to Medicare payment innovation

CMS's voluntary and mandatory payment innovation programs are accelerating the transition to accountable payment models.

Our infographic breaks down the 12 highest profile programs as of September 2015—learn how these programs disrupt the traditional fee-for-service business model.


Next in the Daily Briefing

New rankings: The highest-paid physician specialties

Read now