Accountable Care Organization

An Affordable Care Organization (ACO) is

An Accountable Care Organizations (ACO) is a network of physicians, hospitals, and other medical service providers, which contract as a group with third-party payors. The financial incentive for ACOs is to keep patients out of hospitals, where medical care is more expensive. The ACO model emphasizes coordinated and preventive care in order to reduce health care expenses. The savings are to be divided between the ACO and the third-party payor.

About half of the hundreds of existing ACOs are approved by and contracted with Medicare, while the other half are in contracts with insurance companies.

Medicare ACOs

There are two main types of Medicare ACOs:

• Medicare Shared Savings Program
• Advance Payment ACO Model, which contains additional financial incentives for selected ACOs from the basic Shared Savings program

There was also a Pioneer ACO Model, but that preliminary program is no longer open to applications.

Medicare patients are not obligated to see physicians or facilities that are in Medicare ACOs.