Let's be fair: the Pioneer and Medicare Shared Savings Program (MSSP) Accountable Care Organizations (ACOs) pushed the boundaries of healthcare cost, quality and delivery.
Nevertheless, Next Generation ACOs are expected to meet bigger stretch goals and to unequivocally demonstrate that The Centers for Medicare and Medicaid Services (CMS) is learning and improving. CMS is really counting on the Next Gen to step up and bridge the sizable improvement opportunities from the Pioneer model.
CMS and others should be optimistic about the potential for truly transformative work in the Next Gen ACO model, but we would all do well to maintain the balance between "aspiration" and "rapid cycle iteration." CMS has doubled down on care delivery transformation, and simultaneously upped the ante.
The shared savings opportunity for Next Gen increases to an initial 80%--up from 50%--but with higher rewards come higher risks. We've repeatedly seen that while upside opportunities excite, operational cash flow remains a key challenge for ACOs. Next Gen makes some attempts to address those cash flow challenges. However, it's unclear if the former incentive increases outweigh the latter cash and investment constraints.
Medical practices will need to be well organized, well capitalized, well coordinated across geography and the care continuum, and have both business acumen as well as care model redesign strategies. In short, they'll need to be ready to assume >10,000 covered lives as a business AND care delivery improvement opportunity.
Specifically, Next Gen ACOs require financial strength. They need working capital to fund new and evolving technology and services for population management, as well as significant cash reserves to backstop the amount of significant downside risk.
To win, Next Gen ACOs must rapidly improve ER and hospital utilization—even beyond current levels. This is the largest area of potential cost improvement but requires many ACOs to "gore the ox" of their own hospital system partners.
Next Gens will have to aggressively monitor, incent and manage care toward "in network" resources, which includes beneficiaries who are wintering elsewhere or traveling out of the area. This requires new thinking and fresh approaches to patient engagement that go beyond "access" to after hours care.
Finally, to succeed Next Gen ACOs need to have an "all in" mentality. This is probably the biggest challenge, even for experienced ACOs coming from the Pioneer program. Everyone—from individual practitioners and providers, to managers to leaders—will need to take risks, innovate, iteratively learn, and be willing to make mistakes.
Quality of care will improve in the Next Gen model, for reasons that may include providers paying more attention to assigned beneficiaries' care needs, or patients spending fewer days in a hospital or nursing home where adverse outcome risks abound. However, quality improvement could hit a ceiling well before we've reduced all of the avoidable costs of care related to unnecessary hospitalizations and readmissions.
It's important to recognize that until ACOs are incented to improve utilization of avoidable services (like avoidable hospitalizaitons for chronic disease exacerbations), the Next Gen model may still have "winners" and "losers" despite making healthcare delivery for all patients better in the process.
Ultimately, the measure of success in the Next Gen ACO model should not be how many of the 21 participating organizations reach shared savings in their first year. Instead, the measure of success should focus on how many transformed their care model to one that provides top quality care that is more patient centered and engaging, while lowering avoidable healthcare utilization.
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