Next Generation ACOs saved Medicare $62 million in first year

A type of accountable care organization that requires physicians to take on substantial financial risk saved Medicare just over $100 million in the model's first year, the CMS said in a report released Monday.

After paying out shared savings to providers, Next Generation ACOs generated $62 million in net savings for Medicare. The data is based on findings for the 18 ACOs that launched in 2016 under the new model. They collectively cared for 477,197 Medicare beneficiaries.

Most of the spending decline stemmed from reduced use of post-acute care settings, such as skilled-nursing facilities.

In addition, Next Generation ACO providers' beneficiaries had 9,566 fewer estimated inpatient hospital days in 2016 compared to the prior year and a 12% increase in the number of annual wellness visits.

"ACO leaders noted that primary-care providers are critical because of their focus on preventive care and comprehensive care management," the report said.

Next Generation ACOs nearly have complete financial risk-sharing at either 80% or 100% risk, unlike Medicare Shared Savings Program ACOs, where most of those organizations face no downside risk, and they don't have minimum savings or loss requirements.

The findings bolster the CMS' viewpoint that financial risk encourages ACOs to improve care, which leads to lower spending.

"ACOs in the Next Generation model … are delivering value and providing quality care to patients and taxpayers even in their first performance year, and we believe that these results are achievable for other ACOs under similar incentives," CMS Administrator Seema Verma said in a statement.

Earlier this month, the CMS announced it was planning to overhaul the Medicare Shared Savings Program by scrapping the Track 1 pathway for ACOs. Doctors under this track face no downside financial risk. Currently, 460 of the 561 ACOs in the Shared Savings Program are in Track 1.

The CMS attracted providers to Next Generation ACOs by offering regulatory flexibility that other ACOs don't have, including reduced barriers to use telehealth and post-discharge home visits. Beneficiaries can also voluntarily sign up to be in an Next Generation ACO. In other models, the CMS retrospectively assigns an ACO patients that doctors must reduce spending for.