Main Library
On March 19, 2024, the Centers for Medicare and Medicaid Services (CMS) announced a new voluntary model—the Accountable Care Organization (ACO) Primary Care Flex Model (ACO PC Flex Model)—which will test primary care capitation in CMS’s permanent ACO program, the Medicare Shared Savings Program (MSSP). Under the model, monthly prospective primary care payments to MSSP ACOs will replace fee-for-service payments to primary care providers. The MSSP ACOs will, in turn, be responsible for distributing payments to primary care participants. The model aims to improve the predictability of primary care revenue and incent enhanced primary care services not covered under fee-for-service. Here, we discuss the model, the restrictions on participation, and how these factors may impact the ACO market.
While the ACO PC Flex Model offers notable opportunities to shift parts of our health care system away from the fee-for-service chassis, certain design elements will limit the model’s reach and potentially introduce market distortions. Specifically, CMS intends to limit participation in the model to ACOs that are classified as “low revenue.” This distinction is determined based on the amount of fee-for-service revenue paid to ACO participants as a percentage of total fee-for-service expenditures for attributed beneficiaries, regardless of site of care (see exhibit 1). Most ACOs that include a hospital or high-cost specialty care providers are classified as high revenue, whereas ACOs comprised solely of physicians—especially those with only primary care physicians—are often generally classified as low revenue.