By Josh Patten

Accountable care organizations (ACOs) were understandably disappointed in mid-May when the Centers for Medicare and Medicaid Services (CMS) announced that its Next Generation ACO Model would not be extended into 2022.

Launched in 2016, the CMS model provides experienced ACOs with a way to assume higher financial risks and rewards offered through the Medicare Shared Savings Program (MSSP). The Next Generation ACO Model also enables CMS to test whether strong financial incentives for ACOs, combined with tools to support better patient engagement and care management, can improve health outcomes while lowering costs for original Medicare fee-for-service (FFS) beneficiaries.

ACOs are formed by groups of doctors, hospitals, and other healthcare providers committed to delivering high-quality, coordinated care to their Medicare patients. By coordinating care, an ACO can ensure these patients receive the appropriate care when they need it without wasting money and resources duplicating clinical services such as diagnostic tests. Coordinated care also helps prevent medical errors because clinicians have access to information regarding a patient’s medical and prescription histories.

The payoff for members of ACOs that provide high-quality care while better managing healthcare expenditures is to share in the savings the organization generated for the Medicare program. But there’s a reason ACOs are considered a “shared-risk model”: ACOs falling short of contracted quality standards and financial targets also must collectively share the burden of extra costs.

Beyond the disappointment expressed by organizations such as the National Association of ACOs (NAACOs), the CMS decision creates much uncertainty among ACOs and other risk-bearing entities. About one-quarter of ACOs are trying to figure out their next step: Do they continue in the shared-savings space or leave the model?

CMS and its innovation hub, the Center for Medicare and Medicaid Innovation (CMMI), are offering a new value-based alternative payment arrangement. The Global and Professional Direct Contracting Model launched on April 1 with 53 participants. Direct Contracting Entities (DCEs) allow Medicaid Managed Care Organizations (MCOs) to better coordinate care for their dually eligible Medicaid managed care enrollees as MCO-based DCEs under the existing Professional and Global Direct Contracting Options.

CMS is using the Direct Contracting Model to test whether holding Medicaid MCOs or their corporate affiliates accountable will improve care for elderly Americans. This is in addition to the risk the Medicaid MCOs currently have under Medicaid.

By better aligning incentives, the new MCO-based DCE type encourages partnerships with healthcare providers to implement care coordination programs that can improve quality and reduce Medicare FFS spending. Nonetheless, many healthcare entities are taking a “wait and see” attitude about the Direct Contracting Model.

CMS has signaled that it is genuinely looking to improve care quality and not just check a bunch of boxes. Some organizations may see the recent changes as generally beneficial in requiring less administrative work. However, some new reporting burdens may not be readily apparent.

Many organizations are still trying to figure out how they will manage outside of their ACO businesses. Some are struggling because, while they’ve invested in significant technology to manage their ACOs, they don’t have interfaces to connect every practice everywhere.
So, what should ACO decision-makers do now? Here are four strategies:

First, stick to the basics. That means continuing to focus on effectively managing and engaging with your individual patients and enabling population management by segment. I have been to many ACO conferences and have found that the most innovative strategies are usually the most foundational.

Second, don’t allow uncertainty to immobilize your organization on the road to value-based care (VBC). It’s better to embrace greater financial risk on your own terms than wait to have it thrust upon you by CMS or other payers.

Third, maintain (or develop) a commitment to community-based care. Social determinants of health (SDOH)—social, behavioral, and environmental factors—account for 80% of health outcomes. ACOs should collaborate with community-based organizations that support higher-risk patients. They also should deepen their relationships with their patients using digital communications tools such as secure email, texting, or voice messaging to interact with patients and influence treatment plan adherence and lifestyle changes.

Finally, ACOs today must have a powerful analytics platform with robust data aggregation that can turn data into actionable information. ACOs should ensure their IT systems are providing the necessary insights to support participating providers in improving performance. When your organization is embracing financial risk, visibility into quality and cost metrics is essential. ACOs need to identify negative trends and take early corrective action to protect their shared savings or VBC payments and improve patient outcomes.

There’s risk in moving to another payment model, but ACOs that have succeeded in managing risk will continue to manage their patients well. And they’ll use technology and connective tools to do it. Doing what’s right for the patient works every time.

About the author: Josh Patten is vice president of advisory services at Lightbeam Health Solutions.