NAACOS Welcomes New Direct Contracting Entities, Asks for Next Gen Program Extension

April 9, 2021
The association is again asking CMS to extend the Next Gen Model and believes not allowing another cohort of DCEs creates even more need for CMS to make the model

The Center for Medicare and Medicaid Innovation has announced that 53 Direct Contracting Entities (DCEs) are participating in the Direct Contracting model’s first performance year, which started April 1. The Innovation Center also announced that it will not open a second application period for DCEs to start in 2022.

Reacting to the announcement, the National Association of ACOs (NAACOS) applauded these organizations for their value-based care work, but also noted that because there is no second application period—which the Innovation Center previously said it would allow, according to NAACOS—this means Next Generation ACOs will be forced into the Medicare Shared Savings Program next year absent any change from CMS.

Because there’s no second application period, DCEs accepted to start in 2021 may instead defer their participation to 2022. “NAACOS continues to ask CMS to extend the Next Gen Model and believes not allowing another cohort of DCEs creates even more need for CMS to make the model, which is due to sunset at the end of this year, permanent,” the association said in a statement.

Direct Contracting is seen as the next premier accountable care model from the CMS Innovation Center and seeks to build on the successful Next Generation ACO Model, while redesigning healthcare delivery and payment. Direct Contracting creates three payment options for providers to take risks and earn rewards based on quality outcome, and leverages lessons learned from other Medicare ACO initiatives. There were 51 DCEs who participated in the optional implementation period, which did not hold participants accountable to cost and quality.

The Next Gen model, meanwhile, was set to sunset at the end of 2020, though in light of the operational challenges brought on by the COVID-19 pandemic, CMS extended the model’s final performance period through the end of December 2021. The Direct Contracting model was originally intended to be the successor to the Next Gen program before CMS extended it.

“Those participating in Direct Contracting should be commended for advancing Medicare payment and delivery reform. After a decade, we know accountable care models like Direct Contracting work —benefiting patients, providers, and the Medicare Trust Fund by lowering costs,” NAACOS President and CEO Clif Gaus, said in a statement. “But Next Generation ACOs need clarification on what happens to their participation in high-risk, accountable care models. Next Gen offers a better option and bridge to capitation than the Shared Savings Program.”

The Next Gen ACO program requires participants to take the greatest level of financial risk of any ACO model. Healthcare associations have been asking CMS not to allow the Next Gen ACO program to be sunsetted out of existence. Last year, for instance, Premier referenced 2018 Next Gen ACO results revealing that these ACOs reduced Medicare spending by $242 million that year, achieving nearly $221 million in net shared savings.

For 2019, meanwhile, NAACOS recently announced that 37 of the 41 ACOs in this model collectively saved Medicare $559 million in 2019, with four Next Gen ACOs left out because they’ve deferred financial settlement. The program cares for 1.2 million seniors, but nonetheless, could be expiring soon.

NAACOS said “it continues to advocate for positive changes to Direct Contracting and remains concerned that the model unfairly penalizes provider organizations who have previously participated in shared savings models and generated savings.”

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