Healthcare News & Insights

What does the ‘next generation’ of ACOs mean for hospitals?

What can hospital executives expect under the new Accountable Care Organization (ACO) model, and how does it compare to the other models? 

177400700Patrick Conway, CMS’ chief medical officer and deputy administrator for innovation and quality, announced that the new “next generation” ACO model would create 15 to 20 ACOs with a variety of providers included.

However, this model has some key differences from the other types of ACOs.

More rewards, more risks

For starters, it looks like the Centers for Medicare & Medicaid Services (CMS) is going to offer bigger rewards for improved outcomes and cost savings than before.

However, as one might expect, with the higher reward comes higher risk of losses for not meeting CMS’ care and cost standards.

To compensate for the increased risk of loss, the Next Generation ACO will give groups more predictable financial benchmarks, as well as stronger incentives to improve health outcomes, particularly through coordinating care and engaging beneficiaries.

New participants and providers currently part of Pioneer ACOs are both eligible to be selected as one of the new ACOs. CMS will be selecting participants based on a provider’s:

  • organizational structure
  • leadership and management
  • financial planning and past experience with risk sharing
  • patient centeredness, and
  • clinical care model.

Model differences

The next generation ACO is another example of how CMS is trying to transition providers away from fee-for-service payments, and push them into a value-based payment system. By giving providers higher incentives than in previous Pioneer models, the agency hopes new ACOs will take extra steps to improve outcomes and reduce patient care costs.

As CMS notes, some of the other differences between the Next Generation model and Pioneer ACOs include:

  • increased coverage for telehealth services, skilled nursing facilities and home health care
  • opportunities for beneficiaries to be paid for receiving ACO care, and
  • more collaboration between CMS and ACOs to improve patient communication, particularly about the benefits of ACO care.

CMS is also pushing for more patient engagement by giving new ACOs more tools to meet patients’ healthcare needs in a variety of situations.

It’s reasonable then to assume the groups who will do best under the new model will be those who understand how their patients want or need to be engaged.

For some, that may mean leveraging telehealth to monitor and treat rural, elderly and/or chronically ill patients. For others, it might mean setting up support groups or education programs that teach patients how to manage their own care.

Facilities that want to take advantage of the Next Generation ACO model will want to take time to examine their operations to determine what areas may need to be improved on to meet CMS’ new standards.

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