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Next Generation ACO Model Saves $62 Million in First Year

Jaime Rosenberg
In 2016, the Next Generation Accountable Care Organization (ACO) model generated a net savings of $62 million to Medicare, representing a 1.1% net reduction in Medicare spending. In a webcast with the Accountable Care Learning Collaborative, CMS Administrator Seema Verma called the results a strong start and offered a look at what's in the future for the model.
CMS has released encouraging results from the first performance year of the Innovation Center’s Next Generation Accountable Care Organization (ACO) Model, showing that the model produced savings while upholding quality of care.

In 2016, the model generated a net savings of $62 million to Medicare, representing a 1.1% net reduction in Medicare spending. “What this shows is that these Next Generation ACOs are taking the highest levels of risk, and they’ve managed to maintain quality while lowering costs,” said CMS administrator Seema Verma during a webcast with the Accountable Care Learning Collaborative.

According to Verma, the achieved savings were largely attributable to reductions in hospital and skilled nursing facility spending, which is consistent with what’s been observed in how other 2-sided ACOs have achieved savings. “This is a very strong start,” she said.
Per 1000 beneficiaries, there were 1.7 fewer acute hospital days per month, 15.6 fewer nonhospital evaluation and management visits per month, and 20.4 more annual wellness visits per year.

The Next Generation ACO Model was created in 2016 with 18 participants to assess whether strong financial incentives for ACOs, coupled with tools to support enhanced patient engagement and care management, can improve health outcomes while cutting costs for Medicare fee-for-service beneficiaries. The model is set to run for a 5-year period, ending at the end of 2020.

Those in the model assume an 80% to 100% 2-sided risk, choose from several payment mechanisms, and can select optional benefit enhancements to provide more flexibility in patient care delivery. In the 2016 performance year, most of the participating ACOs chose to assume 80% risk and fee-for-service payment.

The 18 participating ACOs accounted for 31,070 clinicians and 775 healthcare facilities.

Looking to the future of Next Generation ACOs, Verma explained that CMS will look to provide as much flexibility as possible for those taking on 2-sided risk, including implementing waivers that participants would like to see.

“The more risk a provider is willing to take, the more flexible CMS wants to be,” said Verma. She added: “We recognize that sometimes regulations are standing in the way of delivering good quality care. So, to the extent that providers are taking on risk, it gives us the ability to be flexible in a lot of different ways, whether its program integrity or beneficiary engagement.”

During the webcast, Verma also reaffirmed the administration’s commitment to furthering value-based care and addressing existing barriers. She mentioned several initiatives for the future, including a focus on interoperability and supporting innovation through payment reform around devices and telemedicine. She also highlighted patient engagement.

“As we look at value, we haven’t engaged the patient in all of this,” she said. “Even as we’re thinking about new models…that’s something that I want to see across anything that comes out of CMS.”

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