Washington, D.C. — Long-term care providers say they’ve been locked out of one of Medicare’s most promising cost-saving tools — and they want regulators to finally build one that works for them.
The American Health Care Association released a detailed whitepaper this week calling on the Centers for Medicare & Medicaid Services to create an accountable care organization model designed specifically for nursing homes and assisted living facilities. The ask comes as fewer than 10% of skilled nursing facilities currently participate in ACOs — a gap the industry says has cost Medicare billions.
Analysts at ATI Advisory estimate that a well-designed nursing home ACO model could generate more than $2 billion in annual Medicare savings. The data already backs that up: in 2023, Medicare fee-for-service spending on nursing facility residents aligned with an ACO ran 11% lower than spending on unaligned residents. For assisted living, that gap widened to 19%.
“Our recommendations aim to solve the vulnerabilities in existing ACO models and leverage the expertise of our providers in support of CMS’ goal to align financial incentives with improved health outcomes for all Medicare beneficiaries,” said Nisha Hammel, AHCA/NCAL vice president of Population Health Management.
Built for the Wrong Setting
Today’s ACO programs were designed around outpatient and physician-led care — not around facilities that house residents around the clock. Attribution is tied to a provider’s Tax Identification Number or National Provider Identifier, which makes meaningful participation nearly impossible for most nursing homes and assisted living communities.
The AHCA whitepaper recommends fixing that by allowing attribution at the facility’s Certification Number level, creating flexible risk-sharing options, streamlining quality metrics, and building in incentives for interoperable technology. The group also wants CMS to lower the current 5,000-beneficiary participation floor — a threshold that effectively bars many rural and smaller operators from ever getting started.
The timing is intentional. CMS recently launched its LEAD model, a new value-based care framework still in its early stages. Advocates say now is the moment to push for a dedicated long-term care track before the model’s design gets locked in.
Not Everyone Is on Board
The push isn’t going unchallenged. Some on the physician side argue that shifting attribution away from clinician-led ACOs isn’t the right call — and that stronger data-sharing requirements and preferred-facility alignment within existing models would be a better path forward.
“We already have physician-led ACOs that are LTC-centric operating successfully,” said Tom Haithcoat, president of Ceptor Consulting. “CMS should build on what’s working.”
The tension is familiar. It mirrors a broader pattern in which senior care providers have pushed the federal government to invest in dedicated infrastructure rather than retrofitting tools built for a different kind of care system.
A Window That May Not Stay Open
AHCA’s current recommendations update a similar push from 2024 that didn’t result in policy changes. But the political conditions have shifted. The current administration has publicly pushed for a tenfold acceleration of ACO-related savings, and the LEAD model is still in formation — which means the industry has a rare opportunity to shape it from the inside.
Whether CMS acts on the recommendations this time around remains an open question. What’s not in question is the scale of the opportunity: with more than $2 billion in potential annual savings sitting on the table, the case for building a model that actually works for nursing homes has never been harder to ignore.
