What is an Accountable Care Organization?

The Accountable Care Organization (ACO) concept is one that is evolving, but generally, an ACO can be defined as a set of health care providers—including primary care physicians, specialists, and hospitals—that work together collaboratively and accept collective accountability for the cost and quality of care delivered to a population of patients.  An ACO could potentially be formed around a variety of existing types of provider organizations.  Many multispecialty medical groups, physician-hospital organizations, and organized or integrated delivery systems already function as ACOs or have the management and/or payment structure required to quickly evolve into an ACO.  Other provider organizations, such as tightly managed independent practice associations are also likely candidates to become ACOs, but some may require more time and/or infrastructure support to provide the care and cost benefits of an ACO. 


The Affordable Care Act’s most significant contribution to creating ACOs is in the traditional Medicare fee-for-service system.  The law includes a provision that allows Medicare to reward healthcare organizations with a share of the savings that would result from improving care quality and reducing the cost for their eligible Medicare populations..  To participate in this “shared savings program,” healthcare organizations need to become Accountable Care Organizations (ACOs).

The Centers for Medicare and Medicaid Services (CMS) are currently testing several models of care delivery re-design that aim to improve the efficiency of American healthcare systems, improve quality, and contain costs—in other words, to provide accountable care.  Private commercial payers, such as Cigna, Anthem, and Aetna are also supporting ACO formation.

The patient-centered medical home and the accountable care organization are not competing concepts; rather the PCMH is a fundamental component of the ACO. The ACO health care model is part of the 2009 Patient Protection and Affordable Care Act (PPACA), and payers hope that ACOs will save money while improving quality. Consequently, ACOs are likely to be an important part of the future for all family physicians.

Joining an ACO can help you improve the efficiency of your practice, the quality of the care you deliver, and the satisfaction of your patients. Joining may also help your practice stay healthy, since ACO resources such as IT support and process-redesign expertise can be shared among ACO members. More than 400 ACOs have been started or announced to date, and still more are on the way.

If you are thinking about joining an ACO – especially if you are selling your practice to do so – learn all you can before making the leap.
You can start by reviewing the AAFP Resource Guide to ACO Decision Making.


Helpful links

The Common Wealth Fund:
High Performance Accountable Care: Building on Success and Learning from Experience
An online report providing recommendations for ensuring the successful implementation and spread of ACOs to achieve the goals of a high performance health system.

Engelberg Center for Health Care Reform | The Dartmouth Institute
ACO Tool Kit  2011  (PDF-159 pgs)