Building on earlier accountable care organization (ACO) initiatives, the Centers for Medicare & Medicaid Services (CMS) launched the Next Generation Accountable Care Organization (NGACO) model through the Center for Medicare & Medicaid Innovation (CMMI) in January 2016. The NGACO model tests whether stronger financial incentives for ACOs, paired with tools to support patient engagement and care management, can improve health outcomes and lower expenditures for Medicare fee-for-service (FFS) beneficiaries.
However, in a recently released report, the NGACO model was not associated with reduced net Medicare spending in its first two years, as shared savings payouts to NGACOs exceeded the model’s estimated reductions in gross Medicare spending, resulting in the model-wide net spending increase.
NGACO providers reduced gross Medicare spending for their aligned beneficiaries by an estimated $123 million in aggregate (-0.57 percent) compared to similar comparison beneficiaries. But after accounting for shared savings payments, the estimated net impact on Medicare spending was a non-significant spending increase of $93 million in aggregate (+0.4 percent). Notably, NGACOs had no effect on utilization or spending for hospitalizations, an area of large savings potential.
The report focuses on the full sample of 46 NGACOs that participated in the model in PY1 (2016) and PY2 (2017). In PY1, there were 18 NGACOs in the model’s 2016 cohort. The model had 44 NGACOs in PY2, of which 28 newly joined as the 2017 cohort and 16 2016 cohort NGACOs continued from PY1 (two dropped out of the model from the prior year).
There were 1.71 million Medicare beneficiaries aligned with 46 NGACOs, spanning 114 hospital referral regions and 31 states.
A key attribute of the NGACO model is a higher level of shared financial risk and reward than what is available under other Medicare ACO models, including the Medicare Shared Savings Program (SSP), or preceding Pioneer ACO model.
Under the NGACO model, CMS establishes quality standards and sets a spending benchmark for each ACO every performance year based on historical spending for ACO-aligned beneficiaries. As an incentive to participate and to improve the efficiency of care provided to their aligned beneficiaries, NGACOs earn a share of savings from CMS for keeping Medicare spending for their beneficiary population below the benchmark and meeting quality standards. However, if spending exceeds the benchmark, then NGACOs must pay a portion of the losses.
Other highlights of the report:
No impact on acute care hospitals: There were no significant reductions in acute care hospital facility spending or acute care stays, cumulatively across the first two years (-0.39 percent) or for PY2 (-0.28 percent).
Relative increase in SNF stays with no significant change in SNF spending: Model-wide, both cumulatively and in PY2, NGACOs had a smaller decline in SNF stays relative to the comparison group, which had a larger decline. Thus, there were significant differential increases in SNF stay. However, there were no significant impacts on SNF days or reductions in SNF spending.
Reduction in payments to other post-acute care facilities: Spending in other post-acute care facilities (inpatient rehabilitation facilities and long-term care hospitals) decreased significantly in the model-wide cumulative results (-3.48 percent), in PY2 (-3.58 percent), and for the 2017 cohort (-5.27 percent).
Model-wide across PY1 and PY2, the intensity of services provided within home health episodes decreased: Model-wide across PY1 and PY2, the intensity of services provided within home health episodes, as defined by the number of home health visits, declined significantly (-1.25 percent). However, cumulative model-wide impacts for home health spending and home health episodes were uninterpretable.
No spending impact for professional services but some changes in utilization patterns: There were no significant impacts on professional services spending. The number of beneficiaries receiving annual wellness visits increased significantly, model-wide.
No impact on quality-of-care measures: For the most part, there were no significant impacts on beneficiaries with hospitalizations for ambulatory care sensitive conditions (ACSCs), unplanned 30-day readmissions, or unplanned SNF readmissions.
Post-acute Spending and Utilization
The NGACO model seemed to influence post-acute spending and utilization in several ways. NGACOs achieved gross reductions in post-acute care spending for inpatient rehabilitation facilities and long-term care hospitals, and a relative increase in SNF stays over the comparison group.
Annual Wellness Visits
There were significant increases in NGACO beneficiaries with annual wellness visits. This increase could be occurring for two reasons: 1) a $25 Coordinated Care Reward was offered to beneficiaries in PY2 in exchange for receiving an annual wellness visit; and 2) in interviews conducted in 2016, many NGACOs in PY1 reported using annual wellness visits as a means to better engage with attributed beneficiaries and address their gaps in care.