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Affordable Care Act initiative builds on success of ACOs

New generation ACO model sets stronger measures and more opportunities for care

The U.S. Department of Health and Human Services today announced a new initiative from the Centers for Medicare & Medicaid Services’ Innovation Center (CMS Innovation Center): the Next Generation Accountable Care Organization (ACO) Model of payment and care delivery. Made possible by the Affordable Care Act, ACOs encourage quality improvement and care coordination, helping to move our health care system to one that achieves the Department’s goals of better care, smarter spending, and healthier people.

“The Next Generation ACO Model is one of many innovative payment and care delivery models created under the Affordable Care Act, and is an important step towards advancing models of care that reward value over volume in care delivery,” said HHS Secretary Sylvia M. Burwell. “This model is part of our larger effort to set clear, measurable goals and a timeline to move the Medicare program -- and the health care system at large -- toward paying providers based on the quality, rather than the quantity of care they give patients.”

Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program (Shared Savings Program), the Next Generation ACO Model offers a new opportunity in accountable care—one that sets predictable financial targets, enables providers and beneficiaries greater opportunities to coordinate care, and aims to attain the highest quality standards of care.

The ACOs in the Next Generation ACO Model will take on greater performance risk than ACOs in current models, while also potentially sharing in a greater portion of savings. To support increased risk sharing, ACOs will have a stable, predictable benchmark and flexible payment options that support ACO investments in care improvement infrastructure that provides high quality care to patients.

The new ACO model encourages greater coordination and closer care relationships between ACO providers and beneficiaries. ACOs will have a number of tools available to enhance the management of care for their beneficiaries. These tools include rewards to beneficiaries for receiving their care from physicians and professionals participating in their ACOs, coverage of skilled nursing care without prior hospitalization, and modifications to expand the coverage of telehealth and post-discharge home services to support coordinated care at home. The Next Generation ACO Model also supports patient-centered care by providing the opportunity for beneficiaries to confirm a care relationship with ACO providers and to communicate directly with their providers about their care preferences.

“This ACO model responds to stakeholder requests for the next stage of the ACO model that enables greater engagement of beneficiaries, a more predictable, prospective financial model, and the flexibility to utilize additional tools to coordinate care for beneficiaries,” said Patrick Conway, deputy administrator for Innovation and Quality and chief medical officer for CMS.

The Next Generation ACO Model is part of the Department’s efforts to create opportunities for providers to enter into alternative payment models and meet the Secretary’s new goals announced on Jan. 26 to move an increasing percentage of Medicare payments into models that pay providers based on the quality rather than the quantity of care they provide patients.

CMS will accept ACOs into the Next Generation ACO Model through two rounds of applications in 2015 and 2016, with participation expected to last up to five years. Organizations interested in applying in 2015 must submit a Letter of Intent by May 1, 2015, and an application by June 1, 2015. Second round Letters of Intent and applications will be available in spring 2016.

For more information on the Next Generation ACO Model, please visit the Next Generation ACO Model web page.

The Center for Medicare and Medicaid Innovation (CMS Innovation Center) was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care for Medicare, Medicaid and Children’s Health Insurance Program (CHIP) beneficiaries. The CMS Innovation Center is committed to transforming Medicare, Medicaid and CHIP and is expected to help deliver better care for individuals, better health for populations, and lower growth in expenditures for Medicare, Medicaid and CHIP beneficiaries.

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