CMS Announces New Opportunity to Participate in the Advance Payment Model for ACOs

The Centers for Medicare & Medicaid Services (CMS) just announced a new opportunity for smaller accountable care organizations (ACOs) that are not affiliated with hospitals (other than critical access hospitals or small rural hospitals) to participate in the Advance Payment Model ACO program.  For contracts beginning January 1, 2013, applications will be accepted by CMS from August 1, 2012, to September 19, 2012. 

In response to input from stakeholders, the Centers for Medicare & Medicaid Services (CMS) announced in the Federal Register an additional new opportunity for Advance Payment Model Accountable Care Organizations (ACOs).  From August 1, 2012, to 5:00 pm EDT on September 19, 2012, CMS will accept web-based applications for Advance Payment Model ACOs to participate in the performance period beginning on January 1, 2013. 

Previously, on November 2, 2011, the CMS Center for Medicare & Medicaid Innovation (Innovation Center) had published a notice in the Federal Register announcing the testing of the Advance Payment ACO Model.  According to CMS, the Advance Payment ACO Model is designed for small ACOs, and is intended to test whether providing advance payments to such ACOs would increase participation in the Shared Savings Program and allow such ACOs to generate Medicare savings more quickly. 

Before applying for the Advance Payment Model, an ACO must first apply for the Medicare Shared Savings Program.  In addition, only two types of organizations are eligible to participate in the Advance Payment ACO Model:

1. ACOs without any inpatient facilities and that have less than $50 million in total annual revenue
2. ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals and that have less than $80 million in total annual revenue 

Even if an ACO qualifies as one of the two types of organizations described above, it will be ineligible to participate in the Advanced Payment Model if it is co-owned by a health plan.

Successful applicants will receive an advance payment of the shared savings they are projected to earn, to be paid in one of three ways:

• An upfront, fixed payment
• An upfront, variable payment
• A flat monthly payment based on the size of the ACO

On April 1, 2012, five applicants were the first selected to participate in the Advance Payment ACO Model program based on the original CMS testing program.  CMS will announce additional successful applicants after July 1, 2012.