Fact sheet

Medicare-Medicaid Accountable Care Organization (ACO) Model

Medicare-Medicaid Accountable Care Organization (ACO) Model

On December 15, 2016, the Department of Health and Human Services (HHS) announced a new model focused on improving care and reducing costs for beneficiaries who are dually eligible for Medicare and Medicaid (“Medicare-Medicaid enrollees”). Through the Medicare-Medicaid Accountable Care Organization (ACO) Model, the Centers for Medicare & Medicaid Services (CMS) intends to partner with interested states to offer ACOs in those states the opportunity to take on accountability for both Medicare and Medicaid costs and quality for their beneficiaries. This is in accordance with the Department of Health and Human Services’ “Better, Smarter, Healthier” approach to improving our nation’s health care and the Administration setting 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 provide to patients. CMS is adding the Medicare-Medicaid ACO Model to its existing portfolio of ACO initiatives, which include:

  • Medicare Shared Savings Program (Shared Savings Program)
  • Pioneer ACO Model
  • Next Generation ACO Model
  • ACO Investment Model (AIM)
  • Comprehensive ESRD Care (CEC) Model

This document includes background information on ACOs; a summary of the Medicare-Medicaid ACO Model; information on state eligibility, preliminary ACO eligibility; and the application process for the Model; and general information on the CMS Innovation Center.

Medicare ACO Background

Medicare ACOs are made up of groups of doctors, hospitals, and other health care providers and suppliers who come together voluntarily to provide coordinated, high-quality care to the Original Medicare (Medicare fee-for-service) beneficiaries they serve. ACOs are person-centered organizations where the patient and providers are true partners in care decisions. Patients of ACOs maintain all of their Original Medicare benefits and are able to see any Medicare provider. When an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it can share in the savings it achieves for the Medicare program.

The goal of care coordination is to ensure that patients, especially those with chronic conditions, get the right care at the right time while avoiding medical errors and unnecessary duplication of services. Patients and clinicians both experience the frustration of fragmented and disconnected care: lost or unavailable medical charts; duplicated medical procedures and tests; difficulty scheduling appointments; or having to share the same information repeatedly with different doctors. ACOs are designed to lift this burden from patients, while improving the partnership between patients and providers in making health care decisions. ACOs are dedicated to ensuring that Medicare beneficiaries have better control over their health care and providers have better information about their patients’ medical history and better relationships with patients’ other providers. For providers, ACOs hold the promise of realigning the practice of medicine with the ideals of the profession—keeping the focus on patient health and the most appropriate care.

In current Medicare ACO initiatives, beneficiaries who are Medicare-Medicaid enrollees (also known as “dual eligible beneficiaries”) may be attributed to ACOs. Current Medicare ACOs, however, often do not have financial accountability for the Medicaid expenditures for those beneficiaries.

Summary of the Medicare-Medicaid ACO Model

Some of the highest-need, highest risk Medicare beneficiaries are those enrolled in both Medicare and Medicaid. CMS seeks to partner with state Medicaid programs and ACOs to test a Medicare-Medicaid ACO Model. The Medicare-Medicaid ACO Model is an initiative designed by the CMS Innovation Center for new and existing Shared Savings Program ACOs wishing to take on accountability for the full spectrum of Medicare Part A, Part B, Medicaid costs, and quality for their patients. Certain aspects of the Model may vary by state, but the over-arching principles and parameters will be consistent across the Model. If Medicare-Medicaid ACOs in the state generate Medicare savings for their Medicare-Medicaid enrollees, states (as well as the Medicare-Medicaid ACO) may be eligible to share in those savings with CMS.

Through the Medicare-Medicaid ACO Model, CMS seeks to encourage participation from safety-net providers in Alternative Payment Models. Medicare-Medicaid ACOs that qualify as “Safety-Net ACOs” will be eligible to receive pre-payment of Medicare shared savings to support the ACO’s investment in care coordination infrastructure.

States may choose from three options for when to begin the first 12-month performance period for the Model ACOs in the state: January 1, 2018; January 1, 2019; or January 1, 2020.

The Medicare-Medicaid ACO Model includes strong patient protections to ensure that patients have access to and receive high-quality care. Like other CMS ACO initiatives, this Model will be evaluated on its ability to deliver better care for individuals, better health for populations, and lower growth in expenditures. In addition, CMS will publicly report the performance of the Medicare-Medicaid ACOs on quality metrics, including patient experience ratings, on its website.

CMS has released a Request for Letters of Intent from states that wish to work with CMS to design certain state-specific elements of the Model, such as the details of the Medicaid financial methodology and shared savings/shared losses arrangements, selection of additional quality measures, and additional ACO eligibility requirements. States will also have the option to include additional Medicare-Medicaid enrollees not assigned under the Shared Savings Program and/or Medicaid-only beneficiaries in the target population for the Model, subject to CMS approval.

State Eligibility and Application Process

The Medicare-Medicaid ACO Model is open to all states and the District of Columbia that have a sufficient number of Medicare-Medicaid enrollees in fee-for-service Medicare and Medicaid. CMS will enter into Participation Agreements with up to six states, with preference given to states with low Medicare ACO saturation. Additional eligibility requirements and details about the application process are provided in the Request for Letters of Intent found at the Medicare-Medicaid ACO Model web page. States must follow all rules, including those related to Medicaid coverage, payment and fiscal administration that apply under the approach they are approved to offer. CMS will work with states to determine the appropriate Medicaid authority needed for their desired approach. State participation in the Model is contingent upon obtaining any necessary approvals and/or waivers from CMS. 

The chart below indicates the applicable deadline for submission of the Letter of Intent for each of the start dates being offered. Letters of Intent from states must be accompanied by at least one letter of interest from an ACO or health care provider organization in the state. CMS encourages interested states to submit a Letter of Intent as early as possible to begin the development of state-specific aspects of the model and the model application process. The steps necessary to finalize the state-specific aspects of the Model may vary by state; therefore submitting a Letter of Intent prior to the applicable deadline is not a guarantee that the Medicare-Medicaid ACO Model in that state will begin on the state’s preferred first performance year start date.

State's Preferred 1st Year Performance Start Date Deadline to Submit Letter of Intent
2018 January 20, 2017
2019 August 4, 2017
2020 August 3, 2018


Letters of Intent must be submitted by email to

ACO Eligibility and Application Process

The Request for Letters of Intent includes some ACO eligibility criteria, but states and CMS may agree to additional criteria during the state-specific development process. A state-specific Request for Applications will be released to ACOs at a later date. In addition to applying to participate in the Medicare-Medicaid ACO Model, ACOs will be required to apply to participate in (or apply to renew their Participation Agreement for) the Shared Savings Program and ultimately sign a Participation Agreement to participate in the Shared Savings Program in order to participate in the Medicare-Medicaid ACO Model. Providers, whether currently participating in an ACO or potentially interested in joining or forming an ACO, are encouraged to participate in the state-specific development process and to submit letters of interest with their state’s Letter of Intent.

Additional Resources

More information on the Medicare-Medicaid ACO Model, including the Request for Letters of Intent, is available on the CMS Innovation Center website at the Medicare-Medicaid ACO Model website. Any questions about the Model can be directed to

The CMS Innovation Center

The CMS Innovation Center was created by the Affordable Care Act to test innovative payment and service delivery models to reduce program expenditures while preserving or enhancing the quality of care for Medicare and Medicaid beneficiaries. Today’s announcement is part of the Administration’s broader strategy to improve the health care system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.

Working in concert with the Shared Savings Program, the CMS Innovation Center is testing a number of ACO models and has sponsored learning activities that help health care providers form ACOs and improve their results.  More information on all of these initiatives is available on the CMS Innovation Center website at  Additional information on the Shared Savings Program can be found on the CMS website: