An Accountable Care Organization (ACO) is a network of physicians and hospitals working together to offer a full range of healthcare services for patients. The ACO has emerged as the most popular healthcare delivery model of the Affordable Care Act. An ACO would meld together all the different components of patient care—primary care physicians, specialists, hospitals, home health care, etc.—and ensure that all of the parts work well together. Provider reimbursements would be tied to quality improvements and reductions in the total cost of care for an assigned population of patients. The ACO would be held accountable to the patients and the third party payer for the quality, appropriateness and efficiency of the health care provided.
According to the Centers for Medicare and Medicaid Services (CMS), an ACO is ”an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.”
The ACO was created with the hope of improving patient care and reducing unnecessary expenses while also allowing patients the freedom to select their own service provider. The ACO aims to incentivize hospitals, physicians, long term care facilities and other providers to coordinate the delivery of care to patients. The Department of Health and Human Services estimates that ACOs could save Medicare up to $906 million in the first three years.
The ACO network is composed mainly of physicians, hospitals and healthcare professionals. Also included may be home healthcare facilities, health departments, social security departments, and safety net clinics. Any provider or provider organization may assume the leadership role in running the ACO.
The primary payer of the ACO will be Medicare, as it is a prime target for reducing the national deficit. With baby boomers retiring, healthcare costs for the elderly and disabled are expected to soar. Other payers include private insurance companies.
Medicare beneficiaries are the primary patients of the ACO. This may be stretched to include the homeless and uninsured.
The ACO model will need to prove that the product it is creating can actually run better and reduce costs if patients and payers are going to buy it. As far as insurance goes, the major medical malpractice insurance companies are struggling to determine how to best cover the varied exposures of the ACO. The exposures are many and varied: property, workers’ compensation, directors and officers, managed care liability, professional liability, cyber liability, privacy and social media.