Population-based payments (PBPs) 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 lower costs 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 the 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 (AIPBPs). They discuss how ACOs can generate additional revenue by strategically employing these mechanisms and provide an example of a PBP arrangement.
In August, the Centers for Medicare and Medicaid Services (CMS) released a sweeping proposed rule that, if enacted, will significantly change the Medicare Shared Savings Program (MSSP).
In the current program, the track (1, 1+, 2, or 3) chosen by an accountable care organization (ACO) determines the methodology used to assign beneficiaries to that ACO. Under the proposed rule, an ACO will be allowed to select between two beneficiary assignment methods, prospective or retrospective, regardless of track or risk level, and to change its choice annually.
Under the proposed rule, CMS will offer the choice of retrospective or prospective beneficiary assignment to ACOs in the BASIC and ENHANCED tracks for agreement periods beginning July 1, 2019, or later. An ACO will be able to choose a beneficiary assignment methodology at the time of entry and can alter this selection prior to the start of each performance year. Under retrospective assignment, an ACO’s assigned population is based on services incurred during the performance year. Under prospective assignment, an ACO’s assigned population is based on services incurred during the 12-month period ending three months prior to the start of the performance year. If an ACO changes its assignment methodology election, its historical benchmark will be updated (consistent with current practice).
Under current rules, the beneficiary assignment methodology is determined by the track in which an ACO participates. Under the proposed rule, ACOs will be able to select an assignment methodology independent of their track.
There are distinct trade-offs between the two assignment methodologies, and the optimal choice will vary by ACO. In this paper, the third in a series of Milliman white papers about the proposed rule, Milliman’s Colleen Norris, Jason McEwen, and Jonah Broulette explore the differences between the two proposed assignment methodologies and considerations for ACOs as they evaluate their options.