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ACOs taking risk in innovative payment model generate savings for patients and taxpayers

ACOs taking risk in innovative payment model generate savings for patients and taxpayers

Today, the Centers for Medicare & Medicaid Services (CMS) released an evaluation report for the first performance year of the Innovation Center’s Next Generation Accountable Care Organization (ACO) Model showing promising early results. Results demonstrated the positive outcomes in terms of quality and costs when providers are responsible for managing to a budget.  For the 2016 performance year, the Next Generation ACO Model generated net savings to Medicare of approximately $62 million while maintaining quality of care for beneficiaries. As part of CMS’s recent “Pathways to Success” proposal, CMS proposed taking many principles from the Next Generation ACO Model and adopting them more broadly for ACOs in the Medicare Shared Savings Program.

“These results provide further evidence that ACOs succeed under two-sided risk,” said CMS Administrator Seema Verma. “ACOs in the Next Generation Model are being held accountable with strong financial incentives and are provided with substantial flexibility and regulatory relief.  They are delivering value and providing quality care to patients and taxpayers even in their first performance year, and we believe that these results are achievable for other ACOs under similar incentives.”

ACOs are groups of health care providers that agree to take responsibility for the total cost and quality of care for their patients. In return, ACOs receive a portion of the savings they achieve.  HHS has issued waivers to provide the regulatory relief needed to innovate, with more flexibility provided under increasing levels of risk.

After the release of the report, Administrator Verma spoke with the Accountable Care Learning Collaborative—an organization that shares best practices in accountable care with organizations in the healthcare industry—to discuss the results of the report and CMS’s commitment to accelerating the value-based transformation of America’s healthcare system, a top priority of HHS Secretary Alex Azar.

The Next Generation ACO Model involves the highest levels of risk in any ACO initiative offered by CMS. In exchange, ACOs in the Next Generation Model have broader flexibility, including around the provision of telehealth and the ability to offer incentives to beneficiaries for taking steps to achieve and maintain good health. Nearly 1.5 million beneficiaries in Fee-for Service Medicare are currently aligned to a Next Generation ACO.

These results reinforce CMS’ commitment to the principles outlined in the Pathways to Success proposed changes for the Medicare Shared Savings Program. The Administrator released a Health Affairs blog outlining the major provisions in that proposal.

In addition to releasing the evaluation report, for the first time, CMS is releasing a “Findings at a Glance” document, which summarizes the key findings in the evaluation report.

To view the Next Generation ACO Model’s first evaluation report, please visit:

To view the “Findings at a Glance” document, please visit:


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