What are Accountable Care Organizations ?

Accountable Care Organizations (ACO's) are a relatively new idea for managing Medicare. The goal of ACO's is to encourage physicians and hospitals to integrate care by holding them jointly responsible for Medicare quality and costs.

If you have been following the health system reform debate, you may have already heard of accountable care groups as one of the proposed methods being discussed for changing the way the federal government delivers care. The idea of ACO's is gaining traction among policymakers desperate to control costs and boost quality in the system. Proponents of the concept want to see it tested along with such alternatives as patient-centered medical homes, pay-for-performance and payment bundling.

A typical Medicare ACO would include a hospital, primary care physicians, specialists and potentially other medical professionals. Services would still be billed under fee-for-service, but the organization's members would coordinate care for their shared Medicare patients with the goal of meeting and improving on quality benchmarks. Because ACO members are held jointly accountable for this care, they would share in any cost savings that stem from the quality gains. One way to think about it is as somewhat having the potential effectively to take down the wall between the two separate silos of Medicare Part A and Part B.