HHS opens new primary care payment model for physician led ACOs

March 20, 2024

The U.S. Department of Health and Human Services (HHS), through the Centers for Medicare and Medicaid Services (CMS) Innovation Center, has announced a new voluntary model that empowers primary care providers in eligible Accountable Care Organizations (ACOs) to treat people with Medicare using innovative, team-based, person-centered proactive care.

The ACO Primary Care Flex Model will provide a one-time advanced shared savings payment and monthly prospective primary care payments. The advanced shared savings payments provide ACOs with needed resources and flexibility to cover costs associated with forming an ACO (where relevant) and administrative costs for required model activities. The monthly payments will be distributed by ACOs to primary care practices, giving them improved resources and flexibility to provide care that best suits individuals’ needs. 

As part of the HHS initiative to strengthen primary care, the ACO Primary Care Flex Model is designed to incorporate health equity and address health disparities in primary care. The model enhances primary care funding and incentivizes team-based care approaches to medical and social needs, which will create total cost of care savings while preserving or enhancing the quality of care.

The CMS Innovation Center will test this new model within the Medicare Shared Savings Program. The model will focus on and invest in low revenue ACOs, which tend to be smaller and mainly made up of physicians. Low revenue ACOs have historically performed better in the Shared Savings Program, demonstrating more savings and stronger potential to improve the quality and efficiency of care delivery.

The ACO PC Flex Model’s payment structure also promotes competition by providing a pathway for low revenue ACOs, which often have fewer resources, to continue serving people with Medicare while providing an alternative for physicians to stay independent.

The ACO PC Flex Model is a five-year voluntary model that will begin on January 1, 2025. CMS is planning to select approximately 130 ACOs to participate in the model. Organizations interested in participating must first apply — either as new ACOs or renewing ACOs — to the Shared Savings Program. Shared Savings Program Applications are open May 20, 2024 - June 17, 2024. The ACO PC Flex Model Request for Applications (RFA) is planned to be released in the second quarter of 2024.

Webinar: How ACOs Can Help Your Primary Care Organization Thrive

Interested in joining an ACO? The California Medical Association is hosting a free webinar on Tuesday, April 30, 2024, with partner organization Aledade to share an overview of value-based care payment models, accountable care organizations (ACO), and how Aledade's population health management service supports primary care physicians. Click here for more details or to register.

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