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Our Take: CMS introduces new model for low-revenue, primary care-focused ACOs

Mar 25, 2024

On Tuesday, CMS announced the ACO Primary Care Flex Model, with the goal of improving access to high-quality primary care for underserved Medicare populations. 

The voluntary, five-year model will provide participating accountable care organizations with a one-time advanced shared savings payment of $250,000 and monthly prospective primary care payments in place of fee-for-service reimbursement. 

CMS said the advanced shared savings payments could be used to cover infrastructure and administrative costs associated with forming and operating an ACO. Participating ACOs will distribute the monthly payments to their primary care practices, giving them additional resources to provide person-centered care. 

“Incentivizing greater investments in primary care will promote competition among health care providers and enable more people to receive coordinated, high-quality preventive care to keep them healthy — regardless of where they live,” said Xavier Becerra, secretary of the Department of Health and Human Services.

The ACO PC Flex Model is designed to incorporate health equity in primary care while addressing health disparities, CMS said. Rates for the monthly payments will be determined in accordance with county-average spending on primary care, the agency noted, which will “more accurately reflect the cost of providing comprehensive primary care to underserved populations.”

CMS Administrator Chiquita Brooks-LaSure said patients of the participating ACOs will be able to receive care “in more convenient ways, like care based at home or through virtual means, extra help managing chronic diseases, and more preventive health services to keep them healthy.”

The new model will be tested within the Medicare Shared Savings Program, starting Jan. 1, 2025, and will focus on and invest in low-revenue ACOs, CMS said. 

The agency plans to select around 130 ACOs to participate in the model. Those who agree to participate will participate in both the MSSP and the ACO PC Flex Model. “High revenue” ACOs will be ineligible. (For clarification on what CMS deems a low-revenue ACO, see the FAQ link below.)

CMS plans to release a Request for Applications for the new model in the second quarter. A fact sheet provides additional details, and the Center for Medicare and Medicaid Innovation’s website has a frequently asked questions section for the ACO PC Flex Model. 

Our Take: The new model is intended to give smaller ACOs consisting mostly of primary care physicians more opportunity and flexibility to transition to value-based care by providing upfront funds to get the organization started, and then providing a more predictable revenue stream with the monthly payments.   

The National Association of ACOs (NAACOS) said in a statement that it has been advocating for this kind of approach to paying for primary care in the MSSP and applauds CMS for taking this step. 

“Shifting to prospective payments provides primary care practices with stable and predictable cash flow needed to transform care delivery and provide comprehensive, team-based care,” the organization noted. 

But NAACOS criticized the decision to exclude high-revenue ACOs from the new model, saying it “prevents independent primary care practices who have partnered with their local health systems from taking advantage of these much-needed innovations.”

One step at a time. Practices that are already partnering with health systems in high-revenue ACOs are deriving some benefit from the MSSP — at least in theory. 

CMS is attempting to help those who need it most by bringing practices in underserved and rural areas into value-based care. If the model achieves enough success, maybe, just maybe, CMS will expand the model to include more ACOs.

It’s worth asking the question: is CMS adding new participants with this new model, or is it simply recycling the same players year after year?

In an email to me, one seasoned ACO chief executive called it a “non-event,” noting that “There have been zero net new ACOs in the last 4+ years in terms of participants and beneficiaries, only churn and changing names.”

That may be true, and it’s problematic if the agency’s goal is to grow the ACO program through more providers and Medicare beneficiaries. But if CMS is merely tinkering with the ACO model — which began with the Pioneer ACO program in 2012 and ended in December 2016 — in an effort to redouble its efforts on improving primary care in rural areas, then the new model holds promise.

CMS has been focused on rural providers since nearly the inception of the program with the Advance Payment ACO Model and ACO Investment Model (AIM). Post-program evaluations showed that both models demonstrated modest improvements in quality but mixed results on cost savings. However, these efforts did provide the necessary capital for many rural providers to invest in the technology required to practice in a value-based care environment, along with some prepaid funds to offset more patients receiving care.

Devout adherents to the ACO model believe that primary care providers, rural or not, are the key to unlocking savings and improving quality. With the ACO PC Flex Model, CMS is continuing its focus on primary care while addressing health disparities, which in this respect has similarities to ACO Reach.

Looking back, then, the PC Flex Model borrows concepts from several other models previously implemented by CMS. Additionally, it appears to offer more flexibility in how care is delivered, recognizing the benefits of virtual and home-based care. But as with any new quality initiative that CMS introduces, time will tell how well the theory plays out in practice, and whether meaningful gains in quality and reductions in spending are ultimately achieved.

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