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Medicare Program: Next Generation Accountable Care Organization (ACO) Model

This funding record is inactive. Please see the program website or contact the program sponsor to determine if this program is currently accepting applications or will open again in the future.

Centers for Medicare and Medicaid Services
Letter of Intent (Required): May 4, 2017
Application: May 18, 2017

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve. These programs aim to ensure that patients, especially the chronically ill, get the right care at the right time, with the goal of avoiding unnecessary duplication of services and preventing medical errors.

The purpose of the Next Generation Model is to test whether strong financial incentives for ACOs can improve health outcomes and reduce expenditures for Medicare fee-for-service (FFS) beneficiaries. The Model offers financial arrangements with higher levels of risk and reward than other Medicare ACO initiatives.

The objectives for testing different models are to:

  1. Change care delivery from fragmented to coordinated care systems
  2. Improve beneficiary engagement and protections against harm
  3. Protect Medicare Trust Funds while finding new ways of delivering care that will decrease expenditures over time
  4. Learn and share best practices with the purpose of better care for individuals, better health for populations, and lower growth in expenditures for the Medicare fee-for-service population
  5. Develop close working partnerships with providers

The Model will consist of 3 initial performance years and 2 optional 1-year extensions.


Next Generation ACOs may be formed by Medicare enrolled providers structured as:

  • Physicians or other practitioners in group practice arrangements
  • Networks of individual practices of physicians or other practitioners
  • Hospitals employing physicians or other practitioners
  • Partnerships or joint venture arrangements between hospitals and physicians or other practitioners
  • Federally Qualified Health Centers
  • Rural Health Clinics
  • Critical Access Hospitals
Geographic coverage
Amount of funding

Expected number of participants: 45

The Next Generation Model tests the effectiveness of alternative payment mechanisms in facilitating investments in infrastructure and care coordination to improve health outcomes.

Payment mechanisms include:

  1. Normal fee-for-service payment: No change from original Medicare, providers are paid for services performed through normal FFS mechanisms
  2. Normal FFS + monthly infrastructure payment: Providers receive normal FFS reimbursement, and the ACO receives an additional per-beneficiary per-month (PBPM) payment unrelated to claims
  3. Population-based payments (PBP): Participating ACOs will receive a monthly payment to support ongoing activities. The PBP will be based on an estimate of the reduced FFS payments to participating providers.
  4. All-inclusive population-based payments (AIPBP): Monthly payments based upon estimated total annual expenditures for care of aligned Medicare beneficiaries by Next Generation participants and preferred providers
Application process

Links to additional guidance are available on the program website

Tagged as
Accountable Care Organizations · Critical Access Hospitals · Federally Qualified Health Centers · Healthcare quality · Medicare · Reimbursement and payment models · Rural Health Clinics

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