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Accountable Care Organization (ACO) Investment Model

Overview

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to provide coordinated, high-quality care to their Medicare patients to help them deliver better care at lower cost.

The goal of coordinated care is to ensure that patients, especially people with chronic conditions, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

ACOs represent one part of a comprehensive series of initiatives in the Affordable Care Act that are designed to lower costs and improve care. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

Medicare currently offers or is planning to offer several ACO initiatives:

  • Medicare Shared Savings Program
  • Pioneer ACO Model
  • Next Generation ACO Model
  • Advance Payment ACO Model
  • Comprehensive End Stage Renal Disease (ESRD) Care Initiative

This fact sheet provides a general description of the ACO Investment Model, a new ACO model being offered to support the Medicare Shared Savings Program ACOs.

Summary of the ACO Investment Model

The ACO Investment Model is an initiative developed by the Center for Medicare & Medicaid Innovation (Innovation Center) for organizations participating as ACOs in the Medicare Shared Savings Program (Shared Savings Program). The ACO Investment Model is a new model of pre-paid shared savings that builds on experience with the Advance Payment Model to encourage new ACOs to form in rural and underserved areas and current Medicare Shared Savings Program ACOs to transition to arrangements with greater financial risk.

The ACO Investment Model will be available to:

1) New Shared Savings Program ACOs that joined in 2015 or are joining in 2016. The ACO Investment Model seeks to encourage uptake of coordinated, accountable care in rural geographies and areas where there has been little ACO activity, by offering pre-payment of shared savings in both upfront and ongoing per beneficiary per month payments. CMS believes that encouraging participation in areas of low ACO penetration may spur new markets to focus on improving care outcomes for Medicare beneficiaries.

2) ACOs that joined the Shared Savings Program starting in 2012, 2013 or 2014. Here, the ACO Investment Model will help ACOs succeed in the Shared Savings Program and encourage progression to higher levels of financial risk, ultimately improving care for beneficiaries and generating Medicare savings.

Background

CMS is encouraging providers to participate in ACOs through the Medicare Shared Savings Program, which creates financial incentives for ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting Medicare beneficiaries first.

The Innovation Center

The Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care. It is committed to transforming the Medicare, Medicaid and Children’s Health Insurance Programs and is expected to help deliver better care for individuals, better health for populations, and lower growth in expenditures for Medicare, Medicaid and CHIP beneficiaries.

Working in concert with the Shared Savings Program, the Innovation Center is testing the ACO Investment Model and the Pioneer ACO Model, and has sponsored learning activities that help providers form ACOs and improve their results.  More information on all of these initiatives is available on the Innovation Center website at http://innovation.cms.gov.

The ACO Investment Model was developed in response to concerns and available research suggesting that some providers lack adequate access to the capital needed to invest in infrastructure necessary to successfully implement population care management.

Structure of Payments

New ACOs

Under the ACO Investment Model, ACOs that will begin participating in the Medicare Shared Savings Program on January 1, 2015 or January 1, 2016 will receive three types of payments:

  • An upfront, fixed payment:  Each ACO receives a fixed payment.
  • An upfront, variable payment:  Each ACO receives a payment based on the number of its preliminarily prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO:  Each ACO receives a monthly payment based on the number of its preliminarily prospectively-assigned beneficiaries.

The structure of these payments addresses both the fixed and variable costs associated with forming an ACO.

Existing ACOs

Under the ACO Investment Model, ACOs that began participating in the Medicare Shared Savings Program on April 1, 2012, July 1, 2012, January 1, 2013, or January 1, 2014 will receive two types of payments:

  • An upfront, variable payment:  Each ACO receives a payment based on the number of its preliminarily prospectively-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO:  Each ACO receives a monthly payment based on the number of its preliminarily prospectively-assigned beneficiaries.

The structure of these payments addresses both the fixed and variable costs associated with making ongoing investments to improve care coordination for existing ACOs.

Recovery of ACO Investment Model Payments

For ACOs already participating in the Shared Savings Program, CMS will recover the ACO Investment Model payments through an offset of an ACO’s earned shared savings. ACOs selected to receive ACO Investment Model payments will enter into an agreement with CMS that details the obligation to repay ACO Investment Model payments.

If the ACO does not generate sufficient savings to repay the ACO Investment Model payments as of the first settlement for the Shared Savings Program, CMS will continue to offset shared savings in subsequent performance years and any future agreement periods, or pursue recovery where appropriate.

For ACOs new to the Shared Savings Program in 2015 and 2016, CMS will recover payments from earned shared savings for as long as the participant remains in the Shared Savings Program ACO. CMS will pursue full recovery of pre-paid shared savings from any ACO that does not complete its initial Shared Savings Program agreement period or the full term of the ACO Investment Model agreement.

Eligibility/Selection

The ACO Investment Model is expected to help provide support to organizations whose ability to invest in infrastructure and redesigned care processes would be improved with additional access to capital.

In order to be eligible for the ACO Investment Model, an ACO already participating in the Shared Savings Program must meet the following criteria:

1) The ACO must be accepted into and participate in the Shared Savings Program. The ACO’s first performance period in the Medicare Shared Savings Program must have started in 2012, 2013, 2014, or 2015 or will start in 2016.

2) If the ACO started in the Medicare Shared Savings Program in 2012, 2013 or 2014, it has completely and accurately reported quality measures to the Medicare Shared Savings Program in the most recent performance year, excluding ACOs that started in 2015 or that will start in 2016.

3) The ACO has a preliminary prospective beneficiary assignment of 10,000 or fewer beneficiaries for the most recent quarter, as determined in accordance with the Shared Savings Program regulations.  However, ACOs that started the Medicare Shared Savings Program in 2015 or will start in 2016, and are determined to be from a rural area using the application selection criteria, are permitted to exceed the 10,000 beneficiary assignment limit.

4) The ACO does not include a hospital as an ACO participant or an ACO provider/supplier (as defined by the Shared Savings Program regulations), unless the hospital is a critical access hospital (CAH) or inpatient prospective payment system (IPPS) hospital with 100 or fewer beds.

5) The ACO is not owned or operated in whole or in part by a health plan.

6) The ACO did not participate in the Advance Payment Model.

During the selection process, the ACO Investment Model will target new ACOs serving rural areas, areas of low ACO penetration, and existing ACOs committed to moving to higher risk tracks. CMS will also give preference to ACOs that provide high quality of care, achieved their financial benchmark, and demonstrate exceptional financial need.

Application Process

The application period for ACOs that started in 2014 and 2015 — or will start in 2016 — will open July 1st, 2015 and close July 31, 2015.

CMS staff will review applications for the applicant organization’s ability to meet criteria identified in the solicitation. All applicants are also required to be accepted into the Shared Savings Program, in accordance with program rules.

Participants

In the first round of applications for ACOs that started in the Medicare Shared Savings Program in 2012 and 2013, the ACO Investment Model has accepted six ACOs into the model.

Additional Resources

More information about the ACO Investment Model, including the Request for Application, is available on the Innovation Center website at http://innovation.cms.gov/initiatives/ACO-Investment-Model/.  Any questions about the program can be directed to AIM@cms.hhs.gov

For information about the Shared Savings Program, please see: www.cms.hhs.gov/sharedsavingsprogram/.

CMS Blog:   http://blog.cms.gov/2015/06/25/affordable-care-act-initiative-supports-care-coordination-in-rural-areas/

June 25, 2015 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Next Generation Accountable Care Organization (ACO) Model Fact Sheet

Overview

Medicare Accountable Care Organizations (ACOs) provide coordinated, high-quality care and better value to Medicare beneficiaries.  Building on experience from the Pioneer ACO Model and the Medicare Shared Savings Program (MSSP), the Next Generation ACO Model offers a new opportunity in accountable care—one that sets predictable financial targets, enables greater levels of financial risk so that providers have more opportunities to coordinate beneficiaries’ care, and maintains the highest of quality standards consistent with other Medicare programs and models.  This is in accordance with the Department of Health and Human Services’ “Better, Smarter, Healthier” approach to improving our nation’s health care and setting clear, measurable goals and a timeline to move the Medicare program — and the health care system at large — toward paying providers based on the quality rather than the quantity of care they provide to patients.  CMS is adding the Next Generation ACO Model to its existing portfolio of ACO models:

  • Medicare Shared Savings Program (Shared Savings Program)
  • Pioneer ACO Model
  • Advance Payment ACO Model
  • ACO Investment Model
  • Comprehensive End Stage Renal Disease (ESRD) Care Initiative

This document includes background information on ACOs, a summary of the Next Generation ACO Model, information on eligibility and the application process for the model, and general information on the CMS Innovation Center.

Medicare ACO Background

Medicare ACOs are comprised of groups of doctors, hospitals, and other health care providers and suppliers who come together voluntarily to provide coordinated, high-quality care at lower costs to their Original Medicare patients. ACOs are patient-centered organizations where the patient and providers are true partners in care decisions.  Participating patients will see no change in their Original Medicare benefits and will keep their freedom to see any Medicare provider.  Provider participation in ACOs is also voluntary.  When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

The goal of care coordination is to ensure that patients, especially those with chronic conditions, get the right care at the right time while avoiding medical errors and unnecessary duplication of services.  Any patient who has multiple doctors has experienced the frustration of fragmented and disconnected care: lost or unavailable medical charts; duplicated medical procedures and tests; difficulty scheduling appointments; or having to share the same information repeatedly with different doctors.  ACOs are designed to lift this burden from patients, while improving the partnership between patients and doctors in making health care decisions.  Medicare beneficiaries will have better control over their health care, and providers will have better information about their patients’ medical history and better relationships with patients’ other providers.  For providers, ACOs hold the promise of realigning the practice of medicine with the ideals of the profession—keeping the focus on patient health and the most appropriate care.

Medicare beneficiaries whose doctors participate in an ACO will still have freedom of choice among providers and can still choose to see providers outside of the ACO.  Patients choosing to receive care from providers participating in ACOs also will, as in Original Medicare, have access to information about how well their doctors, hospitals, or other caregivers are meeting quality standards.

Summary of the Next Generation ACO Model

The Next Generation ACO Model is an initiative developed by the Center for Medicare & Medicaid Innovation Center (CMS Innovation Center) for ACOs that are experienced in coordinating care for populations of patients.  It will allow these provider groups to assume higher levels of financial risk and reward than are available under the current Pioneer Model and Shared Savings Program (MSSP).  The goal of the Model is to test whether strong financial incentives for ACOs can improve health outcomes and lower expenditures for Original Medicare fee-for-service (FFS) beneficiaries. Core principles of the Model are:

  • Protecting Medicare FFS beneficiaries’ freedom to seek the services and providers of their choice;
  • Engaging beneficiaries in their care through benefit enhancements that directly improve the patient experience and reward seeking care from ACOs;
  • Creating a financial model with long-term sustainability;
  • Utilizing a prospectively-set benchmark that: (1) rewards quality; (2) rewards both improvement and attainment of efficiency; and (3) ultimately transitions away from an ACO’s recent expenditures when setting  and updating the benchmark;
  • Mitigating fluctuations in aligned beneficiary populations and respecting beneficiary preferences by supplementing a prospective claims-based alignment process with a voluntary process;
  • Smoothing ACO cash flow and supporting investment in care improvement capabilities through alternative payment mechanisms.

The Next Generation ACO Model includes strong patient protections to ensure that patients have access to and receive high-quality care.  Like other Medicare ACO initiatives, this Model will be evaluated on its ability to deliver better care for individuals, better health for populations, and lower growth in expenditures.  In addition, CMS will publicly report the performance of the Next Generation ACOs on quality metrics, including patient experience ratings, on its website.

The CMS Innovation Center

The CMS Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care for CMS beneficiaries.

Working in concert with the Shared Savings Program, the CMS Innovation Center is testing a number of ACO models and has sponsored learning activities that help providers form ACOs and improve their results.  More information on all of these initiatives is available on the CMS Innovation Center website at http://innovation.cms.gov.

Eligibility/Selection

CMS expects approximately 15 to 20 ACOs to participate in the Next Generation ACO Model with representation from a variety of provider organization types and geographic regions.  The Model will consist of three initial performance years and two optional one-year extensions.  Specific eligibility criteria are outlined in the Request for Applications found at the Next Generation ACO Model web page.

Application Process

For round one consideration, interested organizations must submit a Letter of Intent (LOI) no later than 11:59 p.m. EDT May 1, 2015.  Round one applications will be made available in March, 2015 and must be submitted electronically no later than 11:59 p.m. EDT June 1, 2015.  Round two Letters of Intent and applications will be made available in March, 2016.  The round two Letter of Intent must be submitted electronically no later than 11:59 p.m. EDT May 1, 2016, and the application no later than 11:59 EDT p.m. June 1, 2016.

To file an LOI and complete the online application, interested organizations may access the instructions at the Next Generation ACO Model web page.

CMS staff will review applications for the applicant organization’s ability to meet criteria identified in the solicitation.

Additional Resources

More information about the Next Generation ACO Model, including the Request for Applications, is available on the CMS Innovation Center website at the Next Generation ACO Model web page.  Any questions about the Model can be directed toNextGenerationACOModel@cms.hhs.gov.

March 10, 2015 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

SAIC Acquires maxIT Healthcare for $473 million

The news just came out that SAIC (NYSE: SAI) will pay $473 million to acquire maxIT Healthcare Holdings Inc. This acquisition brings an additional 1,300 employees to SAIC. That’s a large sum of money for a healthcare IT consulting company.

I find this an interesting acquisition by SAIC. SAIC made a big splash in healthcare when they acquired Vitalize Consulting back in 2011. According to the company’s announcement, their new combined consulting resources makes them the nation’s largest commercial consulting practice in electronic health records (EHR) implementation and optimization services.

Considering maxIT Healthcare has been doing consulting in areas such as accountable care organizations (ACOs) and revenue cycle management (RCM), I think that SAIC is in a great position with all these consulting resources. With the dearth of EHR and healthcare IT talent out there, many hospitals are looking for consulting talent to help them out.

July 18, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.

Health Plan and Employer PHR

After the fall of Google Health, many had written off PHR (Personal Health Record) software as dead and gone. I can’t say that I had much hope for PHR software myself. Although, some of the recent moves by PHR vendor NoMoreClipboard have me pausing to reconsider what value a PHR could provide. My gut tells me they might want to distance themselves from the toxic term, PHR, but they’re definitely being creative with the platform they created.

Right before HIMSS I covered how the PHR could help to facilitate an ACO and Patient Centered Medical Home. Both ACO and PCMH are much more popular terms these days and quite frankly many are still trying to figure out how to make them a reality. I could see a PHR helping to make this happen.

Just yesterday, NoMoreClipboard announced a partnership with Healthx which makes PHR software available to Payers and Employers. I know that many in the investment world are arguing against trying to get money from payers and employers for wellness programs as a startup company. Although, NoMoreClipboard is not a startup company and I have little doubt that integrating their PHR with the Healthx portal was not easily accomplished. I’ll be interested to hear how many of the 12 million people who use Healthx end up using the PHR as well.

Add in the meaningful use stage 2 requirements that PHR can fulfill and maybe just maybe the PHR are back in style. Although, they’re not the PHR that most thought it would be. Instead, it’s taking on new forms that give it an interesting new life.

April 6, 2012 I Written By

John Lynn is the Founder of the HealthcareScene.com blog network which currently consists of 10 blogs containing over 8000 articles with John having written over 4000 of the articles himself. These EMR and Healthcare IT related articles have been viewed over 16 million times. John also manages Healthcare IT Central and Healthcare IT Today, the leading career Health IT job board and blog. John is co-founder of InfluentialNetworks.com and Physia.com. John is highly involved in social media, and in addition to his blogs can also be found on Twitter: @techguy and @ehrandhit and LinkedIn.