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HHS unveils "Next Generation ACO Model"

One of the more interesting but lesser known offspring of the Affordable Care Act (ACA), the accountable care organization (ACO), appears to be holding strong as a model of how healthcare will be delivered in the future.

ACOs have depended heavily, perhaps more than any other form of healthcare provider up to now, on managing population health and using data analytics to do it.

While some ACOs have struggled, the U.S. Department of Health and Human Services’ (HHS) new value-based reimbursement direction dovetails pretty neatly with the rationale for ACOs themselves: pay doctors for how well they treat patients, not how often they do.

And so, about a month after HHS Secretary Sylvia Burwell unveiled her value-based reimbursement roadmap, the agency has followed up by unveiling its new “Next Generation ACO Model.”

According to HHS, the new ACO payment model builds on the experience of Pioneer ACOs and the Medicaid Shared Savings Program by using the same methods:

  • Setting predictable financial targets
  • Giving providers and beneficiaries more opportunities to coordinate care
  • Aiming to raise standards of care

However, under the Next Generation program, ACOs will assume even greater financial risk than previous ACO models, but will also potentially share a greater portion of any savings.

Burwell, in the release announcing the new program, said HHS will make available to Next Generation ACOs new tools to help them manage care.

They include:

  • Rewards to beneficiaries for receiving care from physicians and other caregivers participating in their ACOs
  • Coverage of skilled nursing care without prior hospitalization
  • Incentives to expand coverage of telehealth and post-discharge home services to support coordinated care at home

ACOs can join the Next Generation program via two rounds of applications in 2015 and 2016. Participation is expected for a five-year period. For this year, healthcare organizations that want to apply must submit a letter of intent by May 1 and an application by June 1. Second round letters of intent and applications will be available in spring 2016.

Under the value-based reimbursement system Burwell announced in January, HHS has set goals of tying 30% of traditional Medicare payments to alternative ACO-like quality or value measures by the end of 2016; 50% to alternative payments by 2018.

HHS also set new goals for tying reimbursement in other programs, such as hospital value-based purchasing and hospital readmission reduction programs. The agency aims to tie 85% of payments in these programs to quality or value by 2016 and 90% by 2018.