Next Generation ACO Model

Next Generation ACO Model
Name	Next Generation ACO Model
Launched	2016
Administrator	Centers for Medicare & Medicaid Services
Type	Alternative Payment Model

Next Generation ACO Model The Next Generation ACO Model was an advanced payment and care-delivery demonstration launched by the Centers for Medicare & Medicaid Services to test population-based payment and risk-bearing by networks of providers. Designed as a successor to prior initiatives, it sought to align incentives among Johns Hopkins Hospital, Mayo Clinic, Kaiser Permanente, Cleveland Clinic, and other large provider systems, while engaging stakeholders such as the American Medical Association, American Hospital Association, Medicare Payment Advisory Commission, Congressional Budget Office, and private insurers like UnitedHealthcare. The model emphasized high-risk, high-reward arrangements building on experience from Medicare Shared Savings Program, Bundled Payments for Care Improvement, Comprehensive Care for Joint Replacement, and related demonstrations overseen by Centers for Medicare & Medicaid Services Innovation Center.

Background and Objectives

The model evolved from policy debates involving Affordable Care Act implementation, analyses by Institute of Medicine, commentary from The Commonwealth Fund, and prior demonstrations conducted with partners including HealthCare.gov, Blue Cross Blue Shield Association, and Aetna. Its principal objectives included reducing Centers for Medicare & Medicaid Services expenditures, improving care coordination favored by organizations such as CommonSpirit Health, Ascension Health, and Truven Health Analytics, and advancing value-based payment paradigms promoted by Donald Berwick, Atul Gawande, and Carolyn Clancy. Policymakers compared outcomes against benchmarks used by Medicare Payment Advisory Commission and projections from Congressional Budget Office while considering legal and regulatory issues raised by Department of Health and Human Services and court decisions involving King v. Burwell and other health law litigation.

Model Design and Participation

Participation criteria attracted a mix of integrated delivery systems like Geisinger Health System, physician-led groups such as Pioneer ACOs, academic medical centers including Massachusetts General Hospital and University of California, San Francisco Medical Center, and regional coalitions like Montefiore Health System. Applicants negotiated participation agreements with Centers for Medicare & Medicaid Services Innovation Center and aligned governance structures informed by best practices from Institute for Healthcare Improvement, National Committee for Quality Assurance, and The Joint Commission. The model allowed entities experienced with Pioneer ACO Model or Medicare Shared Savings Program to enter multi-year contracts and required involvement from beneficiary outreach organizations such as AARP and consumer advocates like Kaiser Family Foundation.

Payment Methodology and Risk Arrangements

The payment design combined prospective global payments, retrospective reconciliation, and shared savings/losses similar to arrangements tested by Geisinger ProvenCare and Kaiser Global Budget pilots. Risk arrangements included two-sided downside risk, stop-loss reinsurance concepts comparable to mechanisms used by Blue Cross Blue Shield plans, and hierarchical condition category benchmarking methodologies influenced by research from Johns Hopkins Bloomberg School of Public Health and Harvard T.H. Chan School of Public Health. Financial models used attribution rules akin to those adopted by Medicare Advantage programs and relied on claims processing and data feeds interoperable with systems like Epic Systems Corporation, Cerner Corporation, and IQVIA.

Quality Measurement and Performance Metrics

Performance metrics incorporated a broad set of clinical, patient experience, and utilization measures drawn from National Committee for Quality Assurance standards, HEDIS measures used by National Quality Forum, and patient-reported outcome frameworks advocated by Patient-Centered Outcomes Research Institute. Quality domains included preventive services, chronic disease management informed by guidelines from American College of Cardiology, American Diabetes Association, and American College of Physicians', as well as readmission and emergency department use benchmarks referenced by Agency for Healthcare Research and Quality. Public reporting expectations aligned with transparency initiatives from ProPublica and The Commonwealth Fund analyses.

Implementation and Operational Requirements

Operational requirements mandated robust data analytics, care management capacity, and health information exchange integration with entities such as Health Information Technology for Economic and Clinical Health Act-certified vendors, DirectTrust, and regional health information organizations like Sequoia Project. Participants had to implement beneficiary notification protocols consistent with Centers for Medicare & Medicaid Services guidance, employ risk adjustment methods developed by CMS-HCC, and demonstrate capacity for utilization management, behavioral health integration, and social determinants interventions similar to programs run by Robert Wood Johnson Foundation grantees. Compliance and auditing referenced standards enforced by Office of Inspector General (United States), Government Accountability Office, and external audit firms.

Impact, Evaluation, and Outcomes

Evaluations by Harvard Medical School, RAND Corporation, Urban Institute, and Dartmouth Atlas of Health Care examined spending impacts, quality changes, and beneficiary experience, comparing participants to control cohorts used in analyses by Medicare Payment Advisory Commission and Congressional Budget Office. Findings indicated heterogeneous results: some systems like Geisinger Health System and Kaiser Permanente reported reductions in acute admissions and improvements in preventive care, while others faced challenges with financial losses and attribution stability noted in reports from The Commonwealth Fund and Health Affairs. The model informed subsequent CMS initiatives and rulemaking engaging stakeholders including American Medical Association, American Hospital Association, and National Association of ACOs, shaping ongoing debates about payment reform, risk adjustment, and scale-up of alternative payment models.

Category:Medicare reforms