Strategic use of population-based payments to enhance ACO care management

Population-based payments (PBP) provide Next Generation ACO model (NextGen) participants with an alternative funding mechanism that can be used to improve overall care management with the goal of achieving higher savings. Accountable care organizations (ACOs) that are able to negotiate payment structures with participating providers at a lower cost than the fee-for-service rates paid by the Centers for Medicare and Medicare Services (CMS) can generate additional income.

While PBPs are currently restricted to the NextGen program, if the payment method proves successful, CMS could introduce a similar mechanism to Medicare Shared Savings Program (MSSP) or other risk-sharing programs.

In this article, Milliman consultants Noah Champagne and Jason McEwen list the four alternative payment mechanisms that NextGen participants can elect, including PBPs and all-inclusive population-based payments (AIPBP). They discuss how ACOs can generate additional revenue by strategically employing these mechanisms and provide an example of a PBP arrangement.

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