The U.S. Department of Health and Human Services 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 deliver better care, smarter spending, and healthier people.

“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,” said HHS Secretary Sylvia M. Burwell.

Building upon experience from the Pioneer ACO Model and the Medicare Shared Savings Program (Shared Savings Program), the Next Generation ACO Model promises to set predictable financial targets, while enabling providers and beneficiaries greater opportunities to coordinate care.

The ACOs in the new model will take on greater performance risk than current-gen ACOs, while also potentially sharing in a greater portion of savings. To make this possible, ACOs will have a stable, predictable benchmark and flexible payment options that support investments in care improvement infrastructure that provides high quality care to patients.

The new model encourages greater coordination and closer care relationships between ACO providers and beneficiaries.The new model encourages greater coordination and closer care relationships between ACO providers and beneficiaries. It will be supported by a number of tools to reward beneficiaries for receiving their care from physicians and professionals participating in their ACOs. Additionally, patients will get to benefit from skilled nursing care without prior hospitalization, as well as expanded coverage of telehealth and post-discharge home services to support coordinated care at home.

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.

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