The accountable care organization (ACO) model is shaping up to be the base that future value-based care models will be built on, with more than 50% of Medicare fee-for-service (FFS) beneficiaries being aligned with an ACO now.
While there’s a lot of room for improvement in the ACO model, the Centers for Medicare and Medicaid Services (CMS) has found that even the existing model has the potential to coordinate care at scale, something that hasn’t really existed in Medicare FFS before. And, “spillover effects” from ACOs have helped promote widespread adoption of innovative care delivery options across payers and beneficiaries, according to Purva Rawal, recent past chief strategy officer for the CMS Innovation Center at the Centers for Medicare and Medicaid Services (CMS).
“The program needs to go further. It needs to be bringing in more providers like SNFs into the continuum, creating that new proposition for downstream providers as well … I think we’ll see some of that, maybe in the new CMMI LEAD model,” said Rawal, referring to the CMS Long-term Enhanced ACO Design, or LEAD. LEAD is a 10-year, voluntary program launching in January 2027. More ACO use could add competitive pressure with Medicare Advantage plans too, making FFS a more viable option for beneficiaries.
LEAD may attract new participants, she said, especially providers that are less efficient relative to their markets and therefore motivated to improve care coordination and reduce costs. The long lead time gives participants time to establish relationships with ACOs and build capabilities that support complex patient care.
While conveners – organizations such as managed care organizations (MCOs) that help providers participate in value-based care models by supplying infrastructure, risk management expertise and operation support – were recognized as helpful, especially for smaller operators, CMS is aware that some conveners retain too much of the shared savings while frontline providers receive only a small portion of the financial benefits.
Hence, CMS has become more cautious about ensuring savings flow more directly to providers instead of getting stuck with intermediaries. Conveners won’t disappear but their role is expected to become more balanced over time, Rawal said.
Innovation in the face of Medicare insolvency
Base models aside, the agency and nursing home stakeholders need to get serious about controlling total costs and making the system more sustainable, Rawal said, considering Medicare trust fund insolvency.
“I’ve always viewed it as a means to an end. It’s a mechanism, and I still think it is the strongest mechanism that we have in health care to get better outcomes for individual people at a population level and to manage total costs,” Rawal said of value-based care. “We know the Medicare trust fund is facing insolvency in the not too distant future.”
The agency is facing new cost pressures on top of Medicare insolvency, with an almost $4 trillion delta recorded between projected costs and costs to the Medicare program for claims between 2011 and 2022.
“A lot of people think that value-based care played some role. We saw decreases in hospitalizations, reductions in heart attacks, strokes over that time, and increasing efficiency in the health system,” said Rawal. “I do think that value-based care has been making a dent in the cost trajectory. What we need to do is a better job of capturing that, understanding it, so we can amplify it.”
There aren’t a lot of ways that Medicare fee-for-service payment systems can align settings, providers and services around the needs of people, she added.
When looking at ACOs, bundled payments and oncology models, CMMI found that care delivery changes were spilling over to other providers and payers, and other beneficiaries not aligned to a model.
In other words, ACO adoption changed the way physicians delivered care and that change benefitted all residents, not just those participating in the model.
“We saw a very common set of care delivery strategies getting adopted across for very different models. We saw that care was being delivered differently. Providers were working together differently,” said Rawal. “There was a real desire on the part of many participating providers to keep going in those value programs and models and to continue to implement those care delivery changes beyond the model.”
CMMI started examining the “spillover effects,” of ACOs, with providers adopting a common set of strategies and more investment in technology and infrastructure that spread to other providers and other payers as well.
Integrated care central to future models
As for a value-based care model designed specifically for nursing homes, Rawal said that’s counterintuitive to the integrated care path the agency is headed toward. CMMI aims to create the conditions to manage total costs and for people to form the necessary partnerships and downstream payment arrangements.
Risk needs to be delegated in a way that meets the needs of the community – all signs point to ACO cultivation as a way to do all of this.
“It’s really important to find points of continuity in policy, and I would say that this accountable care space is one of them,” said Rawal. “In the previous administration, we set a goal to have 100% of Medicare beneficiaries in accountable care relationships, and that means longitudinal relationships with providers that are managing quality and total cost of care. This administration is now, over the last three to four months, becoming very vocal about continuing that same goal.”
A perfect example is the development of TEAM, a mandatory episode based payment model, continued by the Trump administration. Participating hospitals will soon take on downside financial risk for episodes of care beginning with surgical episodes and potentially medical episodes later, Rawal said.
Success will depend on quality performance and patient-reported outcomes, but it will be critical for the sector to align their data and care strategies with hospital quality metrics.
Companies featured in this article:
