The U.S. Centers for Medicare & Medicaid Services (CMS) has proposed a new avenue of funding for Accountable Care Organizations (ACOs) with implications for palliative care providers.

The agency’s 2025 Physician Fee Schedule proposed rule contains a provision that would establish a new “prepaid shared savings” option for Medicare Shared Savings Program (MSSP) participants. This would allow ACOs with a history of generating savings to make greater investments in services, improving care coordination, hiring staff and building out health care infrastructure.

This proposed policy dovetails with the Advance Investment Payment (AIP) component of CMS’ ACO Primary Care FLEX payment model demonstration. The AIP includes a one-time, $250,000 advance payment to help cover some of the costs of forming an ACO when appropriate, as well as administrative costs associated with the model. This can include investments in new technology for more robust data collection and analysis.

The proposed rule and ACO Flex aim to use similar methods to address two different issues, according to Anna Basevich, senior vice president of enterprise partnerships and customer enablement at the data analytics firm Arcadia.

“Advanced payment for infrastructure in Primary Care Flex incentivize providers not already in MSSP to join while supporting some of the up-front costs to do so. Meanwhile, the model’s monthly capitated payments support ongoing operations with a steady income stream,” Basevich told Palliative Care News in an email. “In contrast, the advance on shared savings proposed by the physician fees schedule is aimed at keeping high-performing providers in MSSP while codes for advanced primary care proposed in the physician fee schedule provide a steady stream of income that can be used to support performance improvement efforts and keep the lights on.”

The Center for Medicare & Medicaid Innovation (CMMI) announced the new payment demonstration in March. Though the model is focused on primary care, it could help more patients receive hospice and palliative care when appropriate, according to CMS.

Hospices and palliative care providers can come to ACOs by two main avenues. They can become members of those organizations themselves, or they can contract with them through a preferred provider network.

In these preferred provider arrangements, the two parties can negotiate mutually beneficial terms that are customized to the needs and characteristics of their patient population. This may be increasingly important going forward. CMS has announced plans to ensure that 100% of Medicare beneficiaries become aligned with an accountable care entity by 2030.

“The CMS Innovation Center understands that palliative and hospice care are critical to a patient’s care journey, and we anticipate that the ACO PC Flex model’s focus on primary care will help increase access to palliative care and hospice for individuals with Medicare,” a CMS spokesperson told Palliative Care News in an email.

Both the advance payments in the proposed rule and the ACO Flex Program are designed for ACOs participating in MSSP. As of January 1, 2024, 480 ACOs were in the MSSP program. Through these ACOs, more than 634,000 health care providers offer care to over 10.8 million assigned beneficiaries, according to CMS.

ACOs now deliver care to nearly 50% of traditional Medicare beneficiaries. The proposed changes in the Physician Fee Schedule are designed to drive growth in participation, particularly in rural and underserved areas, as well as promote health equity and advance alignment across accountable care initiatives, CMS indicated.

The proposed revisions, if finalized, would bring an estimated 4 million patients under the auspices of MSSP, the agency said.

Both the proposed rule and ACO Flex could give new and existing ACOs a leg up, according to Basevich. Providers who are not already in MSSP may struggle with the cash flow required to sustain daily operations on top of infrastructure investments, she said. Meanwhile, current MSSP participants may struggle to take on additional risk or improve performance in a way that’s financially sustainable. 

“Advanced payments proposed by the physician fee schedule can help solve all three of those challenges,” Basevich said. “ACO Primary Care Flex aims to alleviate similar challenges with bulk advanced payments that participants can use to build networks, establish data analytics capabilities, and hire support staff like care managers to get a new ACO up and running.”