Frequently Asked Questions about ACO in Healthcare

ACO in Healthcare is when groups of doctors, hospitals, and other healthcare providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients. You might be thinking, “why do doctors need to come together before they can voluntarily give care?” Well, they don’t but with accountable care, they get to coordinate quality of care which causes it to increase. Their goal, as is the goal of coordinated care, is to ensure that patients, especially chronically ill patients, get the right care at the right time while avoiding unnecessary duplication of services and preventing medical errors. When an accountable care organization succeeds in delivering high-quality care and spending health care dollars more efficiently, it will share its saving with the Medicare and Medicaid programs.

As there are many programs in the healthcare industry, it can be hard to understand what each program means and how they relate to the overall big picture. So below we answer and discuss some frequently asked questions about Accountable Care Organizations.

Frequently Asked Questions about ACO in Healthcare

Question: What forms of organizations may become an Accountable Care Organization?

Answer: The statute specifies that these groups can become ACOs:

  1. Physicians and other professionals in group practices
  2. Physicians and other professionals in networks of practices
  3. Partnerships or joint venture arrangements between hospitals and physicians/professionals
  4. Hospitals employing physicians/professionals
  5. Other forms that the Secretary of Health and Human Services may determine appropriate.

Question: What are the types of requirements that such an organization will have to meet to participate?

Answer: The statute specifies the following:

  1. Have a formal legal structure to receive and distribute shared savings
  2. Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
  3. Agree to participate in the program for not less than a 3-year period
  4. Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings
  5. Have a leadership and management structure that includes clinical and administrative systems
  6. Have defined processes to (a) promote evidence-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records  (EHR), and (c) coordinate care
  7. Demonstrate it meets patient-centeredness criteria, as determined by the Secretary

Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall.

Question: How would such an organization qualify for shared savings?

Answer: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of per-beneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Question: What are the quality performance standards?

Answer: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Question: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

Answer: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Question: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

Answer: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.


⇒Information provided above comes from aamc.org. Please feel free to do your own research because this topic is complicated and requires much more information before implementation can take place. Thank you for your interest in Accountable Care Organizations within the healthcare industry.