CMS’ New Investment Model Will Help ACOs With Health IT

October 16, 2014 in News

On Wednesday, CMS announced a new initiative intended to help Medicare accountable care organizations in rural and underserved areas improve access to care, quality and care coordination via health IT, Healthcare IT News reports (Miliard, Healthcare IT News, 10/16).


The announcement comes shortly after a joint survey by Premier and the eHealth Initiative found that many ACOs are struggling with interoperability and implementing advanced health IT functions, according to Health Data Management (Goedert, Health Data Management, 10/16).

In the survey, ACOs cited several challenges related to health IT use. For example:

  • 100% of respondents said accessing external data was challenging;
  • 95% cited costs;
  • 95% cited a lack of interoperability;
  • 90% cited a lack of funding or return on investment; and
  • 88% said integration of disparate data from other EHR systems and other sources was a barrier (iHealthBeat, 9/25).

Details of New ACO Initiative

The new ACO Investment Model is for organizations participating in the Medicare Shared Savings Program. Through the model, CMS will invest up to $114 million in infrastructure and redesigned care processes at up to 75 MSSP participants. The goal is to increase the number of Medicare beneficiaries who can participate in Medicare ACOs (Healthcare IT News, 10/16).

According to CMS, the new model is a “pre-paid shared savings” model that will help new ACOs form in underserved areas and existing ACOs move into arrangements that bring more financial risk (CMS factsheet, 10/15).

Among other things, smaller ACOs often struggle to pay for health IT investments needed for accountable care, according to Kavita Patel, a managing director of clinical transformation at Brookings Institution’s Engelberg Center for Healthcare Reform (Evans, Modern Healthcare, 10/15).

Payment Model

Under the new model, each newly formed ACO will get three types of payments:

  • An upfront, fixed payment;
  • An upfront payment based on the expected number of assigned beneficiaries; and
  • A monthly payment based on the size of the ACO to address the fixed and variable costs of creating a new ACO.

Existing ACOs participating in the new model will receive two types of payments:

  • An upfront payment based on the expected number of assigned beneficiaries; and
  • A monthly payment based on the size of the ACO.

CMS will recoup the investments in the ACOs through an offset in the ACO’s shared savings (CMS factsheet, 10/15).

Eligibility, Application Details

To be eligible for the program, an ACO cannot include a hospital with more than 100 beds (AHA News, 10/15).

The application deadline for the new program will depend on when the ACO entered the MSSP. Specifically:

  • ACOs that entered the program in 2012 or 2013 must apply by Dec. 1; and
  • ACOs that entered the program in 2014 or later will be able to apply starting next summer (Hall, FierceHealthIT, 10/16).
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