New ACO Model Targets High-Cost Senior Care Population

Some of the sickest—and most costly—residents in senior care settings are the focus of a new type of accountable care organization (ACO). 

A new ACO is in the works for dual-eligible Medicaid-Medicare beneficiaries, the Centers for Medicare & Medicaid Services (CMS) announced Thursday. These beneficiaries—who typically are very frail, sick, and old—account for a disproportionate share of spending in settings like skilled nursing facilities (SNFs).

Dual-eligible beneficiaries in SNFs cost more than twice as much as non-dual-eligible beneficiaries in 2012, according to the Medicare Payment Advisory Commission (MedPAC), which advises Congress on payments to health plans and providers in Medicare. 


Aiming to improve the quality of care and reduce costs for this group of enrollees, the new Medicare-Medicaid ACO builds on the current Medicare Shared Savings Program. The ACO concept is a group of various health care providers working together to coordinate care to improve quality of care and lower costs.

Providers that maintain quality outcomes and meet Medicare cost savings thresholds can share in those savings. However, providers also take on financial risk in some ACO models, in which they must pay back overspending. The new dual-eligible ACO will be the first to also put Medicaid dollars on the line.

While senior living and care providers have not always gotten along with ACOs, it appears they have an important role to play in managing the care and costs of the dual-eligible population, 17% of whom live in some type of institutional setting. That is compared with just 2% of the Medicare-only population, according to MedPAC.


Currently, dual-eligible beneficiaries may be attributed to ACOs. However, Medicare ACOs do not have financial accountability for Medicaid expenditures for those beneficiaries, according to CMS.

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“This model aims to provide improved care coordination for those enrolled in both Medicare and Medicaid, allowing providers to focus more on providing care for their patients rather than administrative work,” Dr. Patrick Conway, CMS acting principal deputy administrator, said in a statement. “CMS continues to partner with and leverage the best ideas from states to transform our health care system to improve quality and care coordination. In the long run, this partnership will result in healthier people and smarter spending.”

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CMS is accepting letters of intent from states to work with CMS on the model for certain state-specific elements. The agency will enter into participation agreements with up to six states. Once a state is approved, a request for application will be released to ACOs and health care providers in that state. 

Written by Amy Baxter

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