New CMS ACO model to promote accountable care in rural areas

To date, of the more than 330 Medicare Shared Savings Program (MSSP) accountable care organizations, 93 percent have been located in high or mixed population density areas, and very few Rural Health Clinics or Critical Access Hospitals have become MSSP ACOs. Thus, rural America has been relatively untouched by this major accountable care program.

In an effort to change this, on Oct. 15 the Innovation Center of the Centers for Medicare & Medicaid Services announced the launch of the ACO Investment Model. This new initiative will provide up to $114 million in upfront investments, to up to 75 MSSP ACOs. That works out to an average of about $1.5 million per ACO, though the investment amounts will vary based on an ACO’s number of preliminarily prospectively assigned beneficiaries.

Two groups will be eligible to participate in the model: new MSSP ACOs joining in 2016, and ACOs that joined the Shared Savings Program in 2012, 2013 and 2014. As with the Advance Payment Model announced in October 2011, the ACO Investment Model aims to help ACOs succeed in the Shared Savings Program by providing upfront capital to cover startup and ongoing infrastructure costs. CMS also intends to use the ACO Investment Model to encourage MSSP ACOs to move to higher levels of financial risk. In both cases, the ultimate objectives are to improve care for beneficiaries and generate Medicare savings.

[See also: ACOs get down to brass tacks.]

Per the ACO Innovation Model, ACOs that will start participating in the MSSP on Jan. 1, 2016 will receive three types of payments:

• An upfront, standard payment;
• An upfront payment that will vary based on an ACO’s number of preliminarily prospectively assigned beneficiaries;
• A monthly payment that will vary based on an ACO’s number of preliminarily prospectively assigned beneficiaries.

Under the ACO Innovation Model, ACOs that began participating in the MSSP on April 1, 2012; July 1, 2012; Jan. 1, 2013; or Jan. 1, 2014, will receive two types of payments:

• An upfront payment that will vary based on an ACO’s number of preliminarily prospectively assigned beneficiaries;
• A monthly payment that will vary based on an ACO’s number of preliminarily prospectively assigned beneficiaries.

CMS has specified a number of eligibility criteria for participation in the ACO Investment Model, the most salient of which include:

• The ACO has been accepted into and participates in the Shared Savings Program;
• The ACO has a preliminary prospective beneficiary assignment of 10,000 or fewer beneficiaries;
• The ACO does not include a hospital—unless the hospital is a critical access hospital (CAH) or inpatient prospective payment system (IPPS) hospital with 100 or fewer beds;
• The ACO is not owned or operated by a health plan;
• The ACO is not a participant in the Advance Payment Model.

For MSSP ACOs that started in the program in 2012 or 2013, the application period will run from Oct. 15 to Dec. 1 of 2014. For MSSP ACOs started in 2014 or will start in 2016, the application period will be in the summer of 2015.

Whether the financial incentives provided by the ACO Investment Model are sufficient to encourage formation of rural ACOs and/or to motivate existing ACOs to take on greater financial risk—such as moving from a one-sided, upside-only model to a two-sided model with downside risk—constitute the big, unanswered questions about this initiative.