The Centers for Medicare and Medicaid Services (CMS) recently announced the creation of the Next Generation Accountable Care Organization (ACO) model (seehttp://www.hhs.gov/news/press/2015pres/03/20150310b.html).

The new model builds on lessons learned from the earlier Pioneer Model and Medicare Shared Savings Program (MSSP) ACOs.  As with the earlier ACOs, the new model aims to improve quality and coordination of care.  The new model is also part of a larger, ongoing effort to shift Medicare reimbursement away from traditional fee-for-service payment models to alternative and value-based payment models.  Next Generation ACOs will take on greater risk than ACOs did under the earlier models, but will also have the potential to reap greater rewards.

CMS touts its new model as “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.” (http://innovation.cms.gov/initiatives/Next-Generation-ACO-Model/)  The Next Generation model provides several new “benefit enhancement” tools to further these goals.   While patients will be free to visit doctors outside the ACO, the model seeks to encourage patient participation by providing a reward of up to $50 per year to patients who obtain a majority of their care from ACO-participating providers.  Beneficiaries will also have greater ability to confirm their ACO participation and to communicate with their providers.  The new model will increase the availability of home visits, telemedicine services and skilled nursing facilities.  Finally, CMS envisions increased communication and collaboration between CMS and ACOs themselves.

Next Generation ACOs will be measured against new, prospectively determined benchmarks, a change from the current ACO models for which benchmarks are finalized at the end of the performance year.   The new model also provides a choice between two risk arrangements for assessing the ACO’s share of savings or losses.  Four payment systems will be available to the Next Generation ACOs:  traditional fee-for-service; fee-for-service with an additional monthly, per-beneficiary infrastructure payment; population-based; and capitation. 

Letters of Intent for the first round of Next Generation ACO applications are due by May 1, 2015; and the applications themselves are due by June 1, 2015.  A second round of applications will take place during Spring of 2016.