Overview
This article explains how Accountable Care Organizations (ACOs), created under the Affordable Care Act, aim to make healthcare more efficient and cost-effective through coordinated provider networks, incentives for quality care, and shared savings models.
What Are Accountable Care Organizations?
- ACOs are networks of doctors and hospitals sharing responsibility for coordinated patient care to reduce unnecessary spending.
- Each ACO manages care for at least 5,000 Medicare beneficiaries over three years.
- Primary care physicians are central to each patient's care within an ACO.
Purpose and Structure of ACOs in the ACA
- The ACA introduced ACOs to help reduce Medicare costs and improve care efficiency.
- The Medicare Shared Savings Program holds providers jointly accountable and incentivizes cooperation to avoid unnecessary tests and procedures.
- The Pioneer Program enables high-performing systems to earn greater savings in exchange for more financial risk.
Payment and Incentives
- Traditional fee-for-service remains, but ACOs can earn bonuses for keeping costs down and meeting quality benchmarks.
- ACOs that fail to meet standards may incur penalties or lose invested costs for care improvement.
- Physician- or rural-based ACOs may receive advance payments to build necessary infrastructure.
Patient Experience Within ACOs
- Patients are generally referred to providers within the ACO but may see out-of-network doctors without penalty.
- Providers must inform patients about ACO participation and allow them to opt out of data sharing.
Governance and Stakeholders in ACOs
- ACOs must include primary care doctors but can also feature hospitals, specialists, insurers, and private companies.
- Insurers help with data collection and care evaluation but do not direct clinical care.
- Large hospital systems or insurers may lead ACO formation due to capital and data capabilities.
Comparison to HMOs
- Unlike HMOs, ACO patients are not required to remain in-network and retain freedom of provider choice.
- ACOs are subject to strict quality measures to prevent cost-saving at the expense of necessary care.
Potential Risks and Downsides
- The rise of ACOs may speed up hospital and provider consolidation, reducing patient choice and increasing prices.
- Consolidation is seen as a larger systemic trend, not solely caused by ACOs.
Future of ACOs in Health Care
- ACOs may be a transitional model toward a fully value-based care system.
- The ultimate goal is for providers to take full financial responsibility for patient populations under fixed payments, moving beyond traditional ACOs.