What’s an ACO?

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.

The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors.

When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it willshare in the savings it achieves for the Medicare program.

Medicare offers several ACO programs:

Medicare Shared Savings Program

The Centers for Medicare & Medicaid Services (CMS) has established a Medicare Shared Savings Program (Shared Savings Program) to facilitate coordination and cooperation among providers to improve the quality of care for Medicare Fee-For-Service (FFS) beneficiaries and reduce unnecessary costs. Eligible providers, hospitals, and suppliers may participate in the Shared Savings Program by creating or participating in an Accountable Care Organization (ACO).

The Shared Savings Program is designed to improve beneficiary outcomes and increase value of care by:

  • Promoting accountability for the care of Medicare FFS beneficiaries
  • Requiring coordinated care for all services provided under Medicare FFS
  • Encouraging investment in infrastructure and redesigned care processes

The Shared Savings Program will reward ACOs that lower their growth in health care costs while meeting performance standards on quality of care and putting patients first. Participation in an ACO is purely voluntary.

Center for Medicare and Medicaid Innovations
The Affordable Care Act established a new Center for Medicare and Medicaid Innovations (InnovationCenter) that will test innovative care and service delivery models.

Working in concert with the Shared Savings Program, the CMSInnovationCenter is testing an alternative ACO model, the Pioneer ACO Model. The Pioneer ACO Model is designed to support organizations with experience operating as ACOs or in similar arrangements in providing more coordinated care to beneficiaries at a lower cost to Medicare. The Pioneer ACO Model will test the impact of different payment arrangements in helping these organizations achieve the goals of providing better care to patients and reducing Medicare costs.

The CMSInnovationCenter is also testing the Advance Payment ACO Model, which will provide additional support to physician-owned and rural providers participating in the Shared Savings Program who would benefit from additional start-up resources to build the necessary infrastructure, such as hiring new staff or improving information technology systems.

Advance Payment ACO Model

The Advance Payment Model is designed for physician-based and rural providers who have come together voluntarily to give coordinated high quality care to the Medicare patients they serve. Through the Advance Payment ACO Model, selected participants will receive upfront and monthly payments, which they can use to make important investments in their care coordination infrastructure.

There are 35 ACOs participating in the Advance Payment ACO Model.

In developing the Advance Payment ACO Model, CMS is responding to input from stakeholders received on the proposed rule for the Shared Savings Program, and comments received (PDF) on the initial Advance Payment Model announced in May 2011. Some providers have expressed a concern about their lack of ready access to the capital needed to invest in infrastructure and staff for care coordination. The Advance Payment ACO Model is meant to help smaller ACOs with less access to capital participate in the Shared Savings Program.

Initiative Details
Through the Advance Payment ACO Model, selected organizations will receive an advance on the shared savings they are expected to earn. Participating ACOs will receive three types of payments:

  • An upfront, fixed payment: Each ACO will receive a fixed payment.
  • An upfront, variable payment: Each ACO will receive a payment based on the number of its historically-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO: Each ACO will receive a monthly payment based on the number of its historically-assigned beneficiaries.

Advance payments are structured in this manner to acknowledge that new ACOs will have both fixed and variable start-up costs.

Pioneer ACO Model

The Pioneer ACO Model is designed for health care organizations and providers that are already experienced in coordinating care for patients across care settings. It will allow these provider groups to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the Medicare Shared Services Program. And it is designed to work in coordination with private payers by aligning provider incentives, which will improve quality and health outcomes for patients across the ACO, and achieve cost savings for Medicare, employers and patients.

There are 23 ACOs participating in the Pioneer ACO Model.

Initiative Details
The payment models being tested in the first two years of the Pioneer ACO Model are a shared savings payment policy with generally higher levels of shared savings and risk for Pioneer ACOs than levels currently proposed in the Medicare Shared Savings Program. In year three of the program, participating ACOs that have shown a specified level of savings over the first two years will be eligible to move a substantial portion of their payments to a population-based model. These models of payments will also be flexible to accommodate the specific organizational and market conditions in which Pioneer ACOs work.

Organizations across the country have already transformed the way they deliver care, in ways similar to the ACOs that Medicare supports.

As a healthcare provider, must I participate in an ACO?

Participating in an ACO is purely voluntary for providers. We realize different organizations are at different stages in their ability to move toward an ACO model. We want to try to meet you where you are. Our hope is to show you models of participation that will encourage you to participate in and begin this work, no matter your organization’s stage.

What are the rights of my Medicare patients if they see providers who participate in a Medicare ACO?

Fee-for-service Medicare patients who see providers that are participating in a Medicare ACO maintain all their Medicare rights, including the right to choose any doctors and providers that accept Medicare. Whether a provider chooses to participate in an ACO or not, their patients with Medicare may continue to see them.