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What ACOs should do now that CMS won’t extend the Next Gen ACO model through 2022

August 23, 2021
Josh Patten
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.

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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.

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