The Centers for Medicare & Medicaid Services (CMS) recently announced its Better, Smarter, Healthier initiative, part of which plans on tying “30 percent of traditional, or fee-for-service, Medicare payments to quality or value through alternative payment models, such as Accountable Care Organizations (ACOs) or bundled payment arrangements by the end of 2016, and tying 50 percent of payments to these models by the end of 2018.” With only 19 participants in the Pioneer ACO Program and the 89 participants in the Medicare Shared Savings Program (MSSP), spectators have called these goals “lofty.”

As part of its initiative, CMS has made a tangible step towards its goals by introducing a new program — The Next Generation ACO Model.  It should launch in January 2016. The Next Generation ACO Model builds on the Pioneer and MSSP ACOs, offering “financial arrangements with higher levels of risk and reward” — shared savings and losses of up to 80% and 100%.  CMS has published a fact sheet comparing the Pioneer ACO and the Next Generation ACO.

The Next Generation ACO has several distinguishing features. One hope is that, by using “refined benchmarking methods”, the Next Generation Model will facilitate the transition away from using the ACO’s historic financial performance as a metric for shared savings distributions. Secondly, capitation will be one of four options available to enrollees during the second year of their participation. Lastly, the model introduces voluntary beneficiary alignment, which allows beneficiaries the option to confirm or deny their care relationships with specific Next Generation Providers/Suppliers.

Letters of intent  to participate are due May 1, 2015. CMS expects to enroll 15 – 20 ACOs that have experience with care coordination of a population.