Embracing the next-gen model

Aug. 26, 2016
By Thomas J. Van Gilder, M.D., J.D., MPH, CMO and Vice President of Informatics and Analytics, Transcend Insights

As Medicare’s Next Generation Accountable Care Organization (ACO) model starts to take shape, some healthcare organizations may feel they can, and should, stay on the sidelines of value-based reimbursement for at least another year or two, until the path to success becomes clearer. However, healthcare organizations that embark on this journey may find that they will thrive in this new value-based environment. The words of Robert Frost might be applicable here: “Two roads diverged in a wood, and I – I took the one less traveled by. And that has made all the difference.” While the path to value-based care may currently be the one less traveled, it may just make all the difference.

True, the healthcare organizations participating in the Next Generation ACO model and their predecessors in the Pioneer ACO program are already among the more advanced in areas such as electronic health records, integrated network services, and care coordination. However, despite their apparent qualifications to succeed in the Pioneer program – Medicare’s initial attempt at going beyond shared savings to a comprehensive risk-sharing model – only nine of the original 32 “pioneers” remain.1 Others have either moved to the less financially risky Medicare Shared Savings Program (MSSP) or left altogether.

While it’s not as easy to generate savings as experts had predicted, it is possible. The Centers for Medicare & Medicaid Services (CMS) estimated the Pioneer program saved $88 million in its first year, $96 million in its second year, and $120 million in its third.Although five Pioneer ACOs generated losses, 15 generated savings, including 11 who earned shared savings. Moreover, mean quality scores have increased across the board, including particularly strong improvements in medication reconciliation and screenings for clinical depression.

Additionally, CMS has shown its willingness to listen to the concerns of physicians and care teams and change its approach, improving the chances for success in the Next Generation ACO model and beyond. The new model includes a prospectively set benchmark and allows beneficiaries to determine their participation in the ACO rather than be assigned to it.3 The new model also tests incentives for beneficiaries to pursue Next Generation providers for their care, including expanded telehealth and care coordination. Interestingly, several organizations that dropped out of the Pioneer program have signed up for the Next Generation ACO model, a promising move toward value-based care.4

Here are four of the most critical lessons learned from the road less traveled:

  1. The need for population analytics. Under a payment system that rewards optimal care, a healthcare organization will need to understand as much as it can about its patients and prospective patients. Some, especially those with high-cost, chronic illnesses, will benefit tremendously from “high-touch” engagement: frequent contacts, active monitoring, and proactive interventions to prevent adverse events. The healthiest and most tech-savvy can be cared for almost virtually, with email, e-visits, and text reminders, saving time and money for both the patient and a healthcare organization.
  2. Interoperability and data sharing. Care teams today have much more electronic information than they used to, but they often cannot readily combine information from different sources for actionable insights. True interoperability requires agreement among all parties within a care community on how to collect and structure data. While the industry is moving slowly in that direction, for now most care teams will need a significant amount of help cleaning and validating any and all data.
  3. The evolution of the care team/patient relationship. As care teams focus more on disease prevention and the management of chronic conditions, they must also aim to strengthen their patient engagement initiatives. A clinician’s to-do list should include interacting with the patient portal to make it a genuinely useful tool and providing mobile access to reach those who may not have a desktop computer. Additionally, clinicians and care teams can help by identifying friendly technologies that can assist patients to connect more easily and frequently with the healthcare system, and by preparing to receive data from a patient’s fitness tracker, Wi-Fi-enabled scale, or smartwatch.
  4. The need to gather information from multiple settings. A typical patient’s health information can spread over many entities: a long-term care facility, skilled nursing facility, home health agency, one or more pharmacies, community health centers, and telehealth visits. All of these settings generate information that care teams can use to better manage a patient’s care. Therefore, care teams must seek out information sources that they haven’t tapped into before.

Even if a healthcare organization is not ready to embark on the journey to achieving the Next Generation ACO model, it should be evolving its population health management capabilities, developing its data warehouse, and keeping a close eye on participants within the Pioneer, MSSP, Next Generation ACO, and other CMS value-based care programs. These health systems will offer valuable lessons on how to employ information technology to support this major transition to the Next Generation ACO model.


  1. https://innovation.cms.gov/initiatives/Pioneer-ACO-Model/Pioneer-ACO-FAQs.html
  2. https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2015-Fact-sheets-items/2015-08-25.html
  3. http://www.hhs.gov/about/news/2016/01/11/new-hospitals-and-health-care-providers-join-successful-cutting-edge-federal-initiative.html
  4. http://leavittpartners.com/2016/01/medicare-acos-announced-what-happened-and-why-it-matters/