The implementation of accountable care organizations (ACOs), a new health care payment and delivery model designed to improve care and lower costs, is proceeding rapidly. We build on our experience tracking early ACOs to identify the major factors-such as contract characteristics; structure, capabilities, and activities; and local contextthat would be likely to influence ACO formation, implementation, and performance. We then propose how an ACO evaluation program could be structured to guide policy makers and payers in improving the design of ACO contracts, while providing insights for providers on approaches to care transformation that are most likely to be successful in different contexts. We also propose key activities to support evaluation of ACOs in the near term, including tracking their formation, developing a set of performance measures across all ACOs and payers, aggregating those performance data, conducting qualitative and quantitative research, and coordinating different evaluation activities.T he implementation of accountable care organizations (ACOs), a new payment and delivery model designed to improve health care and lower costs, is proceeding rapidly in both the public and private sectors. As of August 2012 we had identified 227 provider organizations that have established ACO contracts with Medicare, Medicaid, private payers, or some combination thereof.The ACO concept originated in response to a growing recognition that fee-for-service payment was a major contributor to the rapidly rising costs and poorly coordinated care that characterize the US health care system. 1 Under this new payment model, provider groups willing to be accountable for the overall costs and quality of care for their patients are eligible for a share of the savings achieved by improving care.Proponents believe that ACOs will encourage providers across the full range of practice settings-from individual office-based practices to integrated delivery systems-to improve quality and slow spending growth. Under this model, payers establish quality benchmarks and riskadjusted spending targets for the patients cared for by the physicians in the ACO. If the organization meets the quality benchmarks, it is then eligible for a share of the savings achieved below the set spending target. In some models, the organization is also at risk for a portion of any spending that exceeds the target. Early evidence on ACO performance is promising. [2][3][4] Challenges to the success of the model remain, however. Little is known about what capabilities and activities are most important to the longterm success of these new organizations. Also, the optimal design of accountable care contracts between providers and payers is uncertain.In addition, many stakeholders are concerned about the complex interactions among public and private reform initiatives based on ACOs. For example, some economists wonder whether implementation of ACOs in the Medicare popu- lation will lead to provider consolidation and thus higher prices for private payers...