About the Next Generation model
The Next Generation ACO model is Medicare's highest-risk ACO program. The program, which launched in 2016, uses a combination of fee-for-service and capitated payments. It has four payment systems and two risk tracks for its participants, including one with almost full risk. Currently, there are 51 ACOs participating in the model.
Medicare beneficiaries voluntarily sign up to participate in Next Generation ACOs. In exchange, the beneficiaries pay reduced or no copayments for certain services, such as primary care visits. CMS said there currently are almost 1.5 million Medicare beneficiaries aligned to a Next Generation ACO.
The report focused on 18 ACOs that participated in the Next Generation model in 2016, the model's first performance year. Overall, ACOs in 2016 reduced Medicare spending by 1.7%, or about $100 million, before shared savings and losses payments.
The report noted that declines in hospital and skilled nursing facility use largely drove the savings.
According to the report, ACOs improved the quality of care beneficiaries received and made progress on health care utilization. Specifically, the report stated that, per 1,000 beneficiaries participating in a Next Generation ACO, there were:
- 20.4 more annual wellness visits per month, up by 11.9% when compared with baseline estimates;
- 15.6 fewer non-hospital evaluation and management visits per month, down by 1.5% when compared with baseline estimates; and
- 1.7 fewer inpatient days per month, down by 1.3% when compared with baseline estimates.
However, the report noted performance varied among ACOs. "Over half of the model's cost and utilization decline was generated by four of the eighteen" participating ACOs, the report stated.
Verma says results show ACOs can take on more risk
CMS in a release said the results "reinforce CMS' commitment" to implementing more downside risk in the Medicare Shared Savings Program.
CMS Administrator Seema Verma said, "These results provide further evidence that ACOs succeed under two-sided risk," noting that "ACOs in the Next Generation model are being held accountable with strong financial incentives and are provided with substantial flexibility and regulatory relief." Verma said the ACOs participating in the Next Generation model "deliver[ed] value and provid[ed] quality care to patients and taxpayers even in their first performance year, and we believe that these results are achievable for other ACOs under similar incentives" (Porter, HealthLeaders Media, 8/27; CMS release, 8/27; CMS report, 1/31; LaPointe, RevCycleIntelligence, 8/27; Haefner, Becker's Hospital Review, 8/27).
The Advisory Board's take
Yulan Egan, Practice Manager, Health Care Advisory Board
“While it's impossible to draw conclusions of directionality... providers that take on more risk tend to produce better financial outcomes”
This latest report reinforces a trend which become apparent in the initial years of the Medicare Shared Savings Program (MSSP) and the Pioneer ACO model: providers that take on more risk tend to produce better financial outcomes than those in upside-only models. While it is impossible to draw conclusions with regards to directionality (i.e. whether downside risk motivates superior performance or whether those already inclined to perform well are more likely to participate in downside models), CMS clearly believes that accelerating the transition to downside risk will improve the financial impact of ACO models on Medicare spending.
While CMS's press release focuses heavily on how the results reinforce their recent proposal to overhaul the MSSP (most notably the drastic decrease in the amount of time participants can spend in upside-only models), here are three other conclusions we took away:
- As in previous years, savings tend to be concentrated among a relatively small number of ACOs. The report notes that "over half of the model's cost and utilization decline was generated by four of the eighteen Next Generation ACOs (NGACOs)." This is consistent with what we've seen in year's past—in 2015, the final year of the Pioneer ACO model, over two-thirds of all the bonuses CMS paid out went to a single ACO run by Banner Health.
- Controlling avoidable post-acute care utilization should be a core component of any Medicare risk strategy. Over the years, many ACO participants have told us they wished they would have developed a robust post-acute care strategy earlier on. This report shows why—it attributes most of the spending reductions among NGACO participants to declines in spending on post-acute care facilities, particularly skilled nursing facilities (SNFs).
- There is no perfect measure for success. Any given evaluation methodology will naturally advantage some organizations while disadvantaging others, and these reports always make that abundantly clear. Program evaluators typically use a different formula from the model's own benchmarking methodology to assess whether or not ACOs saved money. This time around, the results were consistent for 11 out of 18 ACOs, but were in direct conflict for the remaining seven. In fact, evaluators identified five ACOs which had paid a penalty to CMS as actually having saved Medicare money relative to a comparison group.
To learn more about CMS's proposed ACO overhaul, including how the proposed model would differ from past models, how the changes intersect with MACRA, and what this would mean for the future of value-based care, make sure to register for our webconference on Tuesday, September 11th at 3:00 pm.