Washington, D.C. — Skilled nursing facilities serve some of Medicare’s most complex patients, yet less than 10% of them participate in accountable care organizations. A new industry push is trying to fix that — and the price tag on doing nothing keeps growing.
The American Health Care Association released a detailed whitepaper last week calling on federal regulators to build an ACO model designed specifically for nursing homes and assisted living facilities. If adopted, researchers estimate the change could save Medicare more than $2 billion a year.
That’s not a rounding error. It’s a number that’s hard to ignore, especially as the current administration has signaled it wants to dramatically accelerate ACO-driven savings across the healthcare system.
Why Current ACO Models Don’t Work for Long-Term Care
The problem, AHCA argues, is structural. Existing ACO models were built around outpatient, clinician-driven care — not the high-acuity, facility-based population that nursing homes serve every day. The result is a mismatch that keeps most skilled nursing providers on the sidelines of value-based care.
Current attribution methods assign patients to ACOs based on their primary care physician’s Tax Identification Number or National Provider Identifier. That system doesn’t reflect the reality of nursing home care, where the facility itself coordinates the bulk of a resident’s day-to-day services.
AHCA is asking the Centers for Medicare and Medicaid Services to allow attribution through the Long-Term Institutional flag in claims data, or at the facility’s Certification Number level. The shift sounds technical, but it’s the foundation for everything else the association wants to build.
What the Proposal Actually Calls For
The whitepaper lays out a specific set of changes AHCA wants CMS to incorporate into a long-term care ACO model. Among them: flexible risk-sharing arrangements, streamlined quality measurement, incentives for technology adoption, and a lower beneficiary participation floor that would let smaller and rural providers join without hitting a wall.
Currently, participants need at least 5,000 aligned beneficiaries to qualify for certain models. That bar shuts out a lot of independent and rural operators — exactly the ones that often need value-based infrastructure the most.
“This is an opportunity to address the realities of long term care settings and advance coordinated, quality care,” said Nisha Hammel, AHCA/NCAL vice president of Population Health Management.
The data backs up the urgency. In 2023, Medicare spending on nursing facility residents aligned with an ACO ran about 11% lower than on unaligned residents. For assisted living, the gap was nearly 19%. Those aren’t projections — they’re real numbers from ATI Advisory researchers, who used them to estimate the $2 billion annual savings figure.
Not Everyone Is on Board
The proposal won’t sail through without a fight. Physicians aren’t eager to cede their central role in ACO models, and some experts think AHCA is pushing for too much too fast.
Tom Haithcoat, president of Ceptor Consulting, acknowledged the operational complexity nursing homes face when coordinating across multiple ACO entities — but said moving attribution away from clinicians isn’t the answer. “We already have physician-led ACOs that are LTC-centric operating successfully,” he said, adding that CMS should deepen existing partnerships rather than build a new facility-attributed model from scratch.
He predicted opposition from physician groups and ACO associations who worry the approach could set a precedent — with hospitals eventually arguing that attribution should follow facilities rather than patient-facing clinicians.
Still, the window may be open. CMS recently said it wants a tenfold increase in ACO-driven savings, and the agency’s new LEAD model — still in early stages — is designed precisely for the high-needs populations that fill skilled nursing beds. Whether regulators take AHCA’s blueprint seriously is the question worth watching.
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