ACOs

An Accountable Care Organization (ACO) is a network of doctors, hospitals, and other providers that coordinates care for a defined group of patients. The goal is to deliver high-quality care while reducing unnecessary spending, especially through improved care coordination and transitions between care settings.

ACOs often participate in value-based payment arrangements with payers, including Medicare. They are held financially accountable for the quality and total cost of care for attributed patients. In the Medicare Shared Savings Program (MSSP), ACOs can share in savings if spending is below a benchmark and quality targets are met; some contracts also involve downside risk. Patients are attributed to an ACO based on where they receive care.

Governance and composition: ACOs are typically legal entities that include physicians, hospitals, and other providers. They develop care pathways, deploy health information technology, and use care coordinators to align services across primary care, specialists, hospitals, and post-acute care.

History and scope: The model emerged from pay-for-performance initiatives and gained prominence with health policy reforms in the 2010s. CMS and other payers have operated multiple ACO models, including the Pioneer and Next Generation programs, though these have been sunset or restructured; MSSP remains the largest and most widespread.

Impact and challenges: Evidence on cost savings and quality improvements is mixed and varies by market. Challenges include administrative burden, data sharing requirements, alignment of incentives among diverse providers, patient attribution issues, and the risk that cost containment could conflict with individual patient needs.