Medicare Your Coverage Options

What are Accountable Care Organizations?

Written by Diane Archer

Medicare has been experimenting with new payment models to bring down health care costs, improve health care quality and promote healthy communities. One payment model launched in 2013 is a “shared-saving program” that involves “Accountable Care Organizations.” What are Accountable Care Organizations (ACOs)?

ACOs are groups of doctors and/or hospitals, home health agencies and nursing homes that have contracted with  the Centers for Medicare and Medicaid Services (CMS) to coordinate patient care in ways that reduce health care spending and promote quality. If they succeed at lowering costs, they increase their revenues; they share in the savings. ACOs respond to the belief that hospitals and doctors need better incentives to keep patients healthy, improve care quality and reduce costs.

People enrolled in traditional Medicare can also be enrolled in ACOs. According to the HHS Office of the Inspector General (OIG), those enrolled in an ACO tend to be older and have more health risk factors than the typical person with Medicare.

If you are enrolled in traditional Medicare and see a doctor who participates in an ACO, you are automatically enrolled in an ACO. Your doctor will be coordinating your care with other doctors and health care providers in the ACO. But, you are also free to go outside the ACO for your care, like everyone with traditional Medicare.

Unlike a Medicare HMO or other Medicare Advantage plan, in an ACO your care is coordinated, and you are covered for care from virtually any doctor or hospital in the U.S. For more information from CMS on ACOs, click here.

There are 9.7 million people with Medicare currently enrolled in 428 ACOs around the country. In an attempt to determine whether they are getting better care at a lower cost, the HHS OIG studied databases between 2013 and 2015, the first three years of the ACO program. And, the OIG found that “most of them” reduced spending, with total net spending reduction of nearly $1 billion. The OIG also found that they improved quality of care based on CMS quality measures.

To determine whether an ACO improves quality of care, CMS looks at how well the ACO coordinates care, the patient experience, the delivery of preventive care and treatment of at-risk populations. The OIG found that, among other things, the best-performing ACO’s reduced the number of hospital readmissions within 30 days and conducted patient screenings for future fall risks as well as depression screenings and follow-up plans.

The highest-performing ACOs lowered spending by an average of $673 per individual compared to other ACOs, which show an increase in per-person Medicare spending.

Here’s more from Just Care:


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