The U.S. Department of Health and Human Services announced this week the Next Generation Accountable Care Organization (ACO) Model of payment and care delivery. ACOs, which became possible through the Affordable Care Act, encourage quality improvement and care coordination. This model of health care delivery rewards value over volume in care delivery.
An ACO is an organization of healthcare providers who join together and acre to be accountable for the quality, cost and overall care of the patients enrolled in the Medicare program who are assigned to the ACO. The underlying premise of an ACO is to coordinate care among providers to improve the quality of care while also reducing the cost of care by limiting unnecessary spending.
The Next Generation ACO model encourages greater coordination and closer care relationships between ACO providers and beneficiaries. Among the changes in this newest model are coverage of skilled nursing care without prior hospitalization, and modifications to expand the coverage of telehealth and post-discharge home services to support coordinated care at home.
HHS had announced earlier this year that by the end of 2016 it plans to tie 30 percent of its Medicare payments to quality or value through ACO or bundled payment arrangements. By the end of 2018 HHS plans to tie 50 percent of its payments to this model. Secretary Burwell stated “whether you are a patient, a provider, a business, a health plan, or a taxpayer, it is in our common interest to build a health care system that delivers better care, spends health care dollars more wisely and results in healthier people."
Alternative payment models are the wave of the future in the healthcare industry, with the shift emphasizing payment for the value of care provided to patients. In 2011 Medicare made almost no payments to providers through alternative payment models. Today such payments represent approximately 20 percent of Medicare payments. That level will increase by 50 percent by 2016. To add perspective to these numbers, Medicare fee-for-service payments in 2014 were $362 billion.