Medicare's new “Next Generation” accountable care organizations program has raised hopes among many healthcare providers that the Obama administration is listening to them as it pushes ahead toward value-based payment models.
But the ACO initiative announced last week leaves open questions about whether hospitals and physicians will have enough control over patients' utilization patterns and tendencies to roam outside the ACO network, undermining quality and cost-control efforts. At least one health system that has been a Medicare ACO leader said it may bypass the new ACO initiative in favor of diving deeper into the waters of pure capitated payment.
The Next Generation ACO program will start in January, building on the administration's goal to have half of Medicare spending in some type of value-based contract by 2018. But CMS Chief Medical Officer Dr. Patrick Conway said many details of the program are not yet available, such as how much financial risk participants would take on. The agency expects that up to 20 ACOs will join the new program in its first two years.
Andrew Croshaw, president of Leavitt Partners Consulting, said the new ACO model is a significant development for the transition to value-based care. “You're essentially saying to the market, 'This is where we are moving from a methodology and payment standpoint,' ” he said.
Similar to the current Medicare Pioneer and Shared Savings ACO programs, provider groups that meet quality and spending targets will keep some of the program's savings. But Next Generation contracts will use a new formula to calculate savings targets that won't exclusively rely on ACOs' historical performance—an approach that critics say is unfair to providers already delivering low-cost care. Participating ACOs also will be able to take on full-risk capitation by year two.