A new study shows that the next generation of ACOs saved Medicare about $62 million during their first performance year.

According to the first annual Next Generation Accountable Care Organization (NGACO) Model Evaluation conducted by NORC at the University of Chicago, an independent social research organization, the 18 ACOs that participated in the Next Generation program on average saved Medicare $18.20 per beneficiary per month (PBPM) in 2016, the program's first year. The next generation program offers a big payoff, but requires ACOs to take on more financial risk than other ACO models.

Launched in January 2016, the Next Generation model ACOs "have nearly complete financial risk sharing (either 80% or 100% risk) and must take on downside risk ... unlike predecessor ACO models including the Medicare Shared Savings Program and Pioneer models," the report noted. "In addition, there are no minimum savings or loss requirements."

Making up the provider network for the ACOs are 31,070 individual providers and 775 healthcare facilities, with over half (53%) being participating providers — who were the usual source of care to participating beneficiaries — while 47% were "preferred" providers who might be in more than one ACO. Primary care providers were the most common type of individual provider, accounting for almost 33% of both participating and preferred providers.

"The estimated decrease in Medicare spending of $18.20 per beneficiary per month ... is similar to the decrease noted in the first two years of the Pioneer ACO model, and larger than the decrease noted for Medicare Shared Savings Program ACOs in the early years," the report said. "However, there was wide variation in spending across ACOs. Seven ACOs showed Medicare [cost savings of] $30 PBPM, while two showed [cost increases of] $30 PBPM."

In addition to the PBPM cost decrease, other results documented in the report include:


  • 1.7 fewer acute-care hospital days per month per 1,000 Medicare beneficiaries assigned to a Next Generation ACO
  • 15.6 fewer evaluation and management visits per month per 1,000 beneficiaries
  • 20.4 more annual wellness visits per year per 1,000 beneficiaries

CMS issued a proposed rule in early August that would make sweeping changes to the Medicare Shared Savings Program, including overhauling the way ACOs share in risks and rewards. The redesigned program, referred to as the "Pathways to Success" by CMS, would expand ACO participation agreements from three years to five years and offer eligible ACOs two participation options: "basic" and "enhanced." The basic track would allow ACOs to participate under an upside-only agreement for one to two years before gradually phasing in higher levels of risk. Under the enhanced track, ACOs would take on risk and qualify as an advanced APM immediately.

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