The first cohort of accountable care organizations (ACOs) in the Next Generation model generated net savings to Medicare of approximately $62 million while maintaining quality of care for beneficiaries for the 2016 performance year, according to a new evaluation report released by the Centers for Medicare & Medicaid Services (CMS).
The report was prepared by NORC at the University of Chicago, an independent social research organization. CMS Administrator Seema Verma said the 2016 Next Generation ACO performance shows “promising early results” and noted that the results demonstrate “the positive outcomes in terms of quality and costs when providers are responsible for managing to a budget.”
“These results provide further evidence that ACOs succeed under two-sided risk,” Verma said in a statement. “ACOs in the Next Generation Model are being held accountable with strong financial incentives and are provided with substantial flexibility and regulatory relief. They are delivering value and providing 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.”
The full report on the Next Generation ACO model evaluation can be found here, while a “findings at-a-glance” document can be found here.
During a webinar sponsored by the Accountable Care Learning Collaborative Monday morning, Verma touted the Next Generation ACO model results for the 2016 performance year and took the opportunity to advocate again for moving ACOs to two-sided risk models. “What this really shows is that these Next Generation ACOs are taking the highest levels of risk and they’ve managed to maintain quality while still lowering cost,” Verma said during the webinar.
On August 9, CMS proposed a rule that included major changes to the existing Medicare Shared Savings Program (MSSP) ACO program, with the goal to push ACO organizations into two-sided risk models by shortening the duration of one-sided risk model contracts. Referred to as “Pathways to Success,” CMS’ proposal looks to redesign the program’s participation options by removing the traditional three tracks in the MSSP model and replacing them with two tracks that eligible ACOs would enter into for an agreement period of no less than five years: the BASIC track and the ENHANCED track.
The BASIC track essentially limits ACOs to stay in “upside-only” risk models for just two years, compared to the existing allowance of six years. What’s more, those ACOs in an MSSP Track 1 upside-only model would only be able to get 25 percent of any savings they take in, compared to 50 percent, which is the current max.
As part of CMS’s recent “Pathways to Success” proposal, CMS has proposed taking many principles from the Next Generation ACO Model and adopting them more broadly for ACOs in the Medicare Shared Savings Program.
However, many industry stakeholders have criticized the Trump Administration’s push to require downside risk earlier. The National Association of ACOs (NAACOS) called CMS’ proposals to redo the MSSP “misguided,” noting that the changes, if finalized, “will upend the ACO movement by creating havoc with a significant overhaul introducing many untested and troubling policies.”
Many industry stakeholders also fear that a significant number of ACOs will drop out of the program if required to take on downside risk more quickly.
According to CMS, the Next Generation ACO model involves the highest levels of risk in any ACO initiative offered by CMS. In exchange, ACOs in the Next Generation Model have broader flexibility, including around the provision of telehealth and the ability to offer incentives to beneficiaries for taking steps to achieve and maintain good health. Nearly 1.5 million beneficiaries in fee-for-service Medicare are currently aligned to a Next Generation ACO, CMS stated.
The Next Generation ACO model began in January 2016 with an initial cohort of 18 participants. Next Generation ACOs have nearly complete financial risk sharing (either 80 percent or 100 percent risk) and must take on downside risk (risk for losses), unlike predecessor ACO models including the MSSP and Pioneer models, according to CMS. In addition, there are no minimum savings or loss requirements.
Two additional Next Generation ACO cohorts began in 2017 and 2018 and currently there are 51 ACOs participating in the model today. That’s compared to 561 ACOs participating in the MSSP ACO program, with most of them in tracks that do not include downside risk. The Next Generation model is currently scheduled to run for a five-year period ending on December 31, 2020.
According to the evaluation, for the first cohort of Next Generation ACOs, spending was reduced by approximately $100 million (a 1.7 percent decline), or $62 million after adjusting for shared savings/loss payments, corresponding to a decrease of $11.20 per beneficiary per month, or 1.1 percent net savings.
“Consistent with prior ACO work, this savings appeared to be largely associated with reductions in hospital and skilled nursing facility associated costs. Impacts on cost, utilization and quality varied between individual ACOs. Notably, over half of the model’s cost and utilization decline was generated by four of the eighteen NGACOs,” CMS said.
In addition, the evaluation found improved utilization and quality of care among Next Generation ACO providers. Per 1,000 beneficiaries aligned to Next Generation ACO providers, there were 1.7 fewer acute care hospital days per month (a decline of 1.3 percent), 15.6 fewer nonhospital evaluation and management visit per month (decline of 1.5 percent) and 20.4 more annual wellness visits per year (an increase of 11.9 percent), according to the report.
NORC’s first annual report presents initial descriptive and analytic findings for the 18 NGACOs that launched in 2016, were active for at least one quarter and were financially responsible in the model’s first performance year. The analysis estimated the outcomes of the NGACO for the 477,197 beneficiaries aligned during 2016 to NGACO participating providers, compared with non-NGACO Medicare beneficiaries, over three baseline years and performance year one. Claims-based measures included total Medicare spending, spending by care setting and service, four utilization measures, and four quality of care measures.
Looking at the features that characterize the 2016 NGACOs, all of the ACOs had prior experience with commercial or publicly funded value-based care contracts such as the Pioneer ACO, Medicare Shared Savings Program and Medicare Advantage and most had prior experience managing populations. What’s more, of the 18 ACOs participating in the model in 2016, 15 reported prior Medicare ACO experience. Of those with prior experience as an ACO, eight participated in the MSSP, six in the Pioneer model and one in Pioneer first and then MSSP.
Also, 11 of the NGACOs were integrated delivery systems. Most 2016 NGACOs chose the more conservative risk-sharing option and opted to assume 80 percent risk and the fee-for-service (FFS) payment mechanism, rather than 100 percent risk.
