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Seven ACOs Exit Next Generation Model, Blaming CMS for "Unilateral" Changes

Allison Inserro
Two years ago, CMS announced a new model for accountable care organizations (ACOs) that had participants take on greater performance risk but also potentially greater rewards. After the Next Generation ACO Model grew to a list that included 58 organizations across the nation, 7 have now dropped out after CMS made changes to risk adjustment.
Two years ago, CMS announced a new model for accountable care organizations (ACOs) that had participants take on greater performance risk but also potentially greater rewards. After the Next Generation ACO Model grew to a list that included 58 organizations across the nation, 7 have now dropped out.

According to CMS, the model is intended to be an initiative for ACOs that are experienced in coordinating patient care across populations and allows them to assume higher levels of financial risk and reward than the Pioneer Model and Medicare Shared Savings Program.

CMS had said the goal was to see if those financial incentives, along with patient engagement and care management tools, such as telehealth, postdischarge home services, coverage of skilled nursing care without prior hospitalization, and reward payments to beneficiaries for receiving care from ACOs, could improve health outcomes and lower expenditures compared with Medicare fee-for-service.

In a statement sent to The American Journal of Managed Care® (AJMC®), Allison Brennan, vice president of policy for the National Association of Accountable Care Organizations (NAACOS) said she is “disappointed” to see the ACOs leave the Next Generation program.

“These organizations have demonstrated a dedication to value-based care and payment but felt that the program was no longer a good fit for them. Some of these ACOs are leaving because of the challenges they faced earning savings and in response to concerns about Innovation Center policy and methodology changes, such as recent changes to risk adjustment,” said Brennan.

“These departures also illustrate the broader challenges of assuming and managing risk, which continue to be a significant hurdle for ACOs," she said. "NAACOS advocates for fair methodologies and program structure that allows ACO performance to reflect the true efforts of these ACOs. In order for ACOs to have predictability and stability, we urge the Innovation Center to not implement unpredictable unilateral changes during the agreement period.”

Brennan also said the risk adjustment methodology changes "lessen the ability of ACOs to reap benefits from more accurate coding. The Innovation Center also plans to unveil changes very soon which will make updates to key financial methodologies for the program, such as benchmarking, and will go into effect for the final 2 years of the program (2019 and 2020)."

According to Fierce Healthcare, the 7 departing ACOs are Accountable Care Coalition of Chesapeake in Houston, Texas; Allina Health System in Minneapolis, Minnesota; Fairview Health Services in Minneapolis, Minnesota; KentuckyOne in Louisville, Kentucky; Lifeprint ACO in Delaware; MemorialCare in California; and Sharp ACO in California.

Alison Fleury, senior vice president of business development for Sharp, said that CMS made a unilateral change to the participation agreements signed by all of the Next Generation ACOs, which were good for 2017 and 2018. The changes were announced on December 7, 2017, after Sharp had already invested $2 million that year in the care management programs.

CMS introduced a risk adjustment factor which had the effect of lowering all risk adjustment scores by 4.82%, which had a dollar-for-dollar impact on the benchmark that CMS calculates, creating a "significant impact" financially, Fleury said. Sharp serves about 32,500 Medicare FFS beneficiaries in the San Diego area. The risk scores are associated with the sickness of the population, she said. 

In an email to AJMC®, a Fairview Health Services spokesperson said that its decision is effective March 30 and will have no patient impact.  

"Our decision to withdraw is based on our determination that the model design penalizes ACOs that already deliver high-quality, low-cost care. The Fairview Health Network ACO is already well below average for cost nationally. The NextGen financial model as it is structured focuses on improved performance rather than sustained low cost level, and does not take into account our already excellent performance as compared with the rest of the country. As a result, the current model would impose a significant penalty on our network as we continue to deliver outstanding care to these patients."

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