Accountable Care Organizations

What Are Accountable Care Organizations (ACOs)?

Accountable Care Organizations are groups of clinicians, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care a designated group of patients. While some private plans have contracted with ACOs, this page refers mainly to Medicare ACOs.

Coordinated care seeks to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. Under Medicare, when an ACO succeeds both in delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.

The ACO model was included in national health care reform legislation as one of several demonstration programs to be administered by the Centers for Medicare & Medicaid Services (CMS). Participating ACOs assume accountability for improving the quality and cost of care for a defined patient population of Medicare beneficiaries. ACOs in turn receive part of any savings generated from care coordination as long as quality was also maintained.

Medicare offers several different types of ACO programs:

  • Medicare Shared Savings Program - works to achieve better health for individuals, better population health, and lowering growth in expenditures
  • ACO Investment Model - tests prepayment approaches to support MSSP ACOs
  • Next Generation ACO Model -- allows providers to assume more financial risk than other ACO programs
  • Vermont All-payer ACO Model - incentivizes value and quality among Vermont payers
  • Medicare-Medicaid ACO Model - allows MSSP ACOs to be accountable for the quality and costs for Medicare-Medicaid enrollees

Source: AHA Annual Survey database. Copyright © 2018 American Hospital Association.