Advanced Alternative Payment Models Part II: Understanding the Next Generation Accountable Care Organization Model

This article is the second of four parts.

In May 2016, CMS formally announced the six Advanced Alternative Payment Models (APMs) that they will consider as fully qualifying APMs under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) in a proposed rule.(1) Although this may seem insignificant to the uninitiated, this is a major step toward moving the entire national system toward a fee-for-performance setup. This is of note for all physicians practicing in the United States, because if a practice does not embrace an APM, that could readily result in that practice being forced to “compete” for reimbursements against predetermined peer groups through the non-APM Merit-Based Incentive Payment System (MIPS), which replaces the former Sustainable Growth Rate-driven conversion factor in determining how relative value units are altered for specific practices under the former fee-for-service (FFS) system. For some, MIPS may represent an unacceptable risk to practice viability, as changes in reimbursement levels can vary from ± 4% to ± 9% starting in 2019. Although some may “win” and receive bonuses through MIPS, just as many may see significant losses through not meeting CMS performance targets.

We, therefore, have chosen to highlight the most critical aspects of the Advanced APMs listed as acceptable alternatives to the MIPS-driven reimbursement structures to help foster understanding of these programs (Table 1). This article, the second in the series, focuses on the most critical aspects of the Next Generation Accountable Care Organization (ACO) Model. The APMs not discussed in this article are covered in other parts of this series.

What is the Next Generation ACO Model?

The Next Generation ACO Model is another refined APM that was born from prior experience from clinician and industry feedback on the Pioneer ACO Model and the Medicare Shared Savings Program,(2) discussed in Part I. Operating under the same concept of coordinated care across organizations as the Shared Savings Program, this Advanced APM takes the concepts of risk–benefit sharing beyond the limits established in the three tracks of the Shared Savings Program. The Next Generation ACO Model is suitable only for organizations heavily experienced with ACO-specific operational requirements and, almost without mentioning, is not appropriate for organizations or practices seeking their first APM, particularly an ACO, for adoption. This Advanced APM is still in the initiative phase, meaning that it is still being evaluated for suitability for broader wide-scale adoption and refinement. Hence, CMS reports that only 21 ACOs are participating in it as of the time of this article’s writing.(3)

The Next Generation ACO Model will apply to claims filed under both Parts A and B for relevant organizations and eligible providers (EPs). Adjustments to payments based on quality performance, as in the Shared Savings Program, are made based on performance in the Electronic Health Record Incentive Program, Physician Value Modifier, and the Physician Quality Reporting System across the domains of patient experience, care coordination/patient safety, preventive health, and at-risk population management.

Two risk–benefit sharing avenues exist for participants that exceed the capped limits of the Shared Savings Program. Participants in Arrangement A share 80% of losses or savings to CMS up to a total annual cap of 15%, whereas participants in Arrangement B observe 100% shared savings and losses, up to the same annual maximum. The symmetry of this equal sharing of savings versus losses may be skewed, however, because budget sequestration may lower maximum shared savings but not be applied to shared losses.(4) There are no specific uniform minimum savings or loss rates that have to be met before sharing dollar amounts occurs, as were seen with the Shared Savings Program or the older Pioneer ACO Model. However, a standard, regional, national, and organizational quality discounted benchmark will be calculated to determine organization-specific baselines anywhere from 0.5% to 4.5% (Table 2). The benchmark itself is calculated based on annual cost and program specific efficiency data, with a maximum year-to-year baseline adjustment limited to a maximum of ±3.0%.

Organizations and EPs that elect to participate can choose from four major payment mechanisms by which they can receive their reimbursements for services rendered(5):

1. Normal FFS claims, as traditional for Medicare claims with adjustments made each year;

2. A combination of the traditional FFS claim system plus a shared savings/losses infrastructure based on the amount of savings/losses per Medicare beneficiary per month (PBPM);

3. A model in which participants can elect to reduce the amount of FFS reimbursements they receive in lieu of greater proportions of monthly PBPM payments or penalties for shared savings or losses, respectively; or

4. A capitation model, in which the organization receives PBPM capitation payments, which are distributed to providers seeking claims within the organization.

These options are provided to allow appropriate flexibility for an organization in choosing the reimbursement method most likely to promote optimal performance for that organization.

Who Can Qualify for Participation in the Next Generation ACO Model?

As with the Shared Savings Program, this APM is open to any and all primary care and specialist physicians, nurse practitioners, physician assistants, and clinical nurse specialists seeking entry into the program alongside a relevant healthcare providing organization or suppliers. The caveat mentioned previously, however, should be re-emphasized: this is a model intended for ACO-experienced organizations and, due to this simple fact, may preclude any applications from organizations or EPs who are unfamiliar with practicing in an ACO setting. Considering the very high level of risk associated with shared losses, for organizations that are inclined toward the ACO but are still naive, it may be prudent to investigate the Shared Savings Program Tracks 1 or 2, at a minimum, before attempting the Shared Savings Program Track 3 or Next Generation ACO Model. Simply participating in a CMS-approved APM that is not “advanced” will exclude an EP from forced participation in MIPS, although they will not receive the advanced APM benefits highlighted in MACRA.

How Do I Apply for the Next Generation ACO Model?

Like the Shared Savings Program, this ACO model will have three one-year periods of data gathering and performance evaluation, with two optional one-year extensions available upon request and approval. For applications processed and approved in 2017, a three-year agreement will be established for participation, whereas for applications processed in 2018, a two-year agreement will be standard. Applicants will have to submit multiple documents over the course of their entry into the program (Table 3). Applications are processed through the primary CMS website, which is only available for new applicants early in the application season prior to deadlines for submitting their Letter of Intent to apply.(6)

Further information can be obtained through the CMS website(1,8) using the links provided in the references at the end of this article. Publications such as this one and those distributed by the AMA and other specialty-specific organizations are also invaluable tools in further understanding the suitability of each advanced APM given the unique clinical space that a physician or other clinical provider may occupy.

References

1. Medicare Access and CHIP Reauthorization Act (MACRA), Pub. L. No. 114-10, 129 Stat. 87 (codified at 42 U.S.C. 1305 (2015)).

2. Next Generation ACO Model. CMS.gov . December 15, 2016. https://innovation.cms.gov/initiatives/Next-Generation-ACO-Model/ . Accessed January 9, 2017.

3. Next Generation Accountable Care Organization Model (NGACO Model). CMS.gov . January 11, 2016. www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-01-11.html . Accessed June 26, 2016.

4. Next Generation ACO Model Benchmarking Methods. CMS.gov . December 15, 2015. https://innovation.cms.gov/Files/x/nextgenaco-methodology.pdf . Accessed June 26, 2016.

5. Pioneer ACO Model and Next Generation ACO Model: Comparison across key design elements. CMS.gov . April 28, 2015. https://innovation.cms.gov/Files/fact-sheet/nextgenaco-comparefactsheet.pdf . Accessed June 26, 2016.

6. Next Generation Accountable Care Organization (ACO) Model: Announcement of 2018 Application Round. CMS.gov . December 15, 2016. https://innovation.cms.gov/Files/x/nextgenaco-faq-round.pdf. Accessed January 9, 2017.

7. Next Generation ACO Model: frequently asked questions. CMS.gov . May 2016. https://innovation.cms.gov/Files/x/nextgenacofaq.pdf . Accessed June 26, 2016.

8. Next Generation ACO Model Request for Applications. CMS.gov . https://innovation.cms.gov/Files/x/nextgenacorfa.pdf . Accessed June 26, 2016.