ACOs that sign up for this new model would receive a loan and additional monthly payouts, which would be paid back with deductions from bonuses they earn. The CMS is also offering the loans to existing Medicare ACOs that may be poised to exit because of rising financial stakes. Those that apply must meet certain eligibility criteria and agree to switch to the program's higher-risk tracks, which obligate them to accept potential penalties alongside potential bonuses starting in 2016 or 2017.
The agency is attempting to address barriers that policy experts say are preventing medical groups in rural communities from joining Medicare's test of accountable care, which began more than two years ago as one initiative to reform U.S. healthcare financing. Medicare has expanded the initiative each year, and the new capital program will be available to those seeking to join in 2016.
Capital constraints present a “very real need,” said Larry Kocot, a visiting fellow working with the Brookings Institution's ACO Learning Network. “That's a constant barrier” for small, physician-operated ACOs.
Smaller hospitals, too, struggle to make necessary upfront investments, said Terry Hill, senior advisor for rural health leadership and policy for the National Rural Health Resource Center in Duluth, Minn., and executive director of Rural Health Innovations. “The rural hospitals don't generally have very deep pockets, nor do they have a lot of capital,” he said.
Smaller organizations struggle to pay for information technology beyond the expense of electronic health records. That includes software to analyze data and report quality, said Dr. Kavita Patel, managing director of clinical transformation at the Engelberg Center for Healthcare Reform. “Just because you have an EMR doesn't mean you're ready to be an ACO,” she said. ACOS must also finance the additional expense of skilled staff to manage data and complex patients, she said.
The new program will also target existing Medicare ACOs that may be poised to exit because of rising financial stakes. Whether existing ACOs qualify will depend on their willingness to accept potential penalties alongside potential bonuses starting in 2016 or 2017. Most Medicare ACOs are exempt from penalties for three years, but eligible for potential bonuses based on their ability to manage the quality and cost of care.
The CMS does not yet have a number for how many of the roughly 340 Medicare ACOs in the Shared Savings program are eligible. The total cost of advance payments is projected to be $114 million.
The Innovation Center already operates an advanced-payment model for Medicare ACOs, which also provides loans to small organizations but with different eligibility criteria. To date, 35 ACOs are operating in the advance-payment model.
Follow Melanie Evans on Twitter: @MHmevans
