Investor's wiki

Accountable Care Organizations (ACOs)

Accountable Care Organizations (ACOs)

What Are Accountable Care Organizations (ACOs)?

Accountable Care Organizations (ACOs) are networks of healthcare providers who collaborate to give improved and more cost-viable treatment to patients. These organizations were laid out under the Medicare Shared Savings Program, a portion of the Affordable Care Act (ACA) of 2010.

ACOs were initially intended to support Medicare participants yet have developed to incorporate private payer networks also.

Figuring out Accountable Care Organizations (ACOs)

Accountable care organizations were intended to share information, give more cost-viable treatment services, and eliminate redundancies for patients in the Medicare system. ACOs are structured around a patient's primary care physician (PCP), however ought to likewise incorporate hospitals, drug stores, subject matter experts, and other service providers to accomplish optimal effectiveness.

The ACO model was presented through the Medicare Shared Savings Program, a part of the 2010 Affordable Care Act (ACA). The ACA mandates that an approved ACO deal with the healthcare of at least 5,000 patients more than a three-year period. ACOs are directed by the Centers for Medicare and Medicare Services (CMS).

The ACO system has developed past the Medicare environment to incorporate private payer networks and has retained the expense for-service payment model of Medicare. The major adjustment to this model under the ACO system is a set of incentives intended to reward providers for more efficient care.

How ACOs are Incentivized

The ACA incentive matrix is intended to counteract the propensity of costs to rise pointlessly under the traditional Medicare expense for-service model. ACO providers are graded against a series of quantitative benchmarks that are adjusted to account for regional cost differences. These benchmarks are spread across four categories: Patient/Caregiver Experience; Care Coordination/Patient Safety; Preventative Health; and At-Risk Population.

The Electronic Health Record (EHR) system gathers data on a group of criteria in every category, and providers are positioned against their companions on every criterion. Hospital readmission rate is one illustration of a grading criterion. Points are granted to those providers in light of their percentile positioning as well as an ACO's improvement over the performance in previous years. Rewards for high performance come as increased reimbursement rates.

CMS presented another tier of ACOs in 2016, known as the Next-Generation ACO (NGACO). This program is accessible to laid out ACOs ready to acknowledge greater financial risk yet rewards those organizations with more grounded financial rewards. It is likewise a helpful testing mechanism for CMS to try different things with more sophisticated grading criteria.

Downsides of the ACO System

Pundits of the ACO system have communicated worries that it will lead to consolidation among providers which could lead to higher costs as fewer wellbeing systems hold greater negotiating power over insurers. Early research recommends that this has occurred somewhat and that the cost of resources expected to consent to the reporting system is a major factor driving providers toward mergers.

For consumers, the possible downside of the ACO model is the sensation of being caught in an unfortunate network. ACOs are intended to limit this risk by eliminating the structural impediments of the HMO system, however some healthcare financial specialists stress that consolidation could limit options open to a consumer.


  • ACOs were created to cut out redundancies for Medicare patients by boosting providers to share information and give cost-viable treatment services.
  • Pundits contend it ultimately advances consolidation, which might lift costs, and that it could leave consumers feeling they are forced to work inside a network that they could do without.
  • Accountable Care Organizations (ACOs) are collaboratives that give Medicare patients exhaustive healthcare coverage, formed as part of the Affordable Care Act (Obamacare).
  • The system was initially geared toward Medicare patients yet has expanded to incorporate private payer networks.