Accountable Care Organization

Accountable care organizations (ACOs) are of doctors, hospitals and other health care providers who voluntarily work together to provide high-quality health care for Medicare patients. ACOs avoid duplicating or providing unnecessary services and aim to reduce costs as a result.

What Is an Accountable Care Organization?

Accountable care organizations were established by the Affordable Care Act to improve high-quality care for Medicare beneficiaries while reducing costs to the Medicare program.

The law encourages doctors, hospitals and other health care providers to voluntarily come together, creating their own accountable care organizations. Their network makes it easier to coordinate care for patients and the ACO becomes eligible for bonuses when they deliver more efficient care.

Did You Know?
As of January 2020, about 12.3 million Medicare beneficiaries were receiving care from 558 Medicare ACOs in the United States. And about 1,625 community hospitals — about 59 percent — participated in an ACO.

The efficiency and cost savings are supposed to come from this coordinated care approach, eliminating duplication of care and unnecessary care.

Each ACO has to manage health care needs for at least 5,000 people on Medicare for at least three years. And each patient has to have a primary care physician within the accountable care organization.

In addition, the Affordable Care Act allowed the creation of accountable care organizations for non-Medicare health care. The journal Health Affairs reported in 2015 that the majority of ACO volume was coming from the commercial and Medicaid sectors.

Is an Accountable Care Organization Right for You?

If you receive health care through a Medicare accountable care organization, your doctor will likely refer you to hospitals or specialists within the same ACO.

While this sounds similar to a health maintenance organization, unlike an HMO, you are free to seek Medicare-covered health care outside the ACO.

The chief benefit of an ACO for Medicare beneficiaries is the coordinated care you may receive. Every doctor, hospital, specialist and other health care provider in the ACO communicates with everyone else on your health care team.

This can even extend beyond your medical team to long-term care providers and local social services you may utilize.

Coordinated care within ACOs can include:
  • Primary care doctors
  • Specialists
  • Hospitals
  • Long-term care
  • Local services

How to Join an Accountable Care Organization

You can’t enroll in an ACO — they are networks that your doctor would have voluntarily joined. If your doctor is part of an ACO, he or she will tell you. Your doctor should also be able to explain what it means for you and your care.

One of the key elements of accountable care organizations is the ability to share medical information about patients among doctors, hospitals and other health care providers in the ACO.

This helps coordinate the care you receive, but many people may feel uncomfortable about it. If you don’t like the idea of that shared information, you have the right to opt out of it.

You are also not required to see other providers in the ACO if you don’t want to. Your doctor may refer you to other providers in the accountable care organization, but you have the right to see other providers outside ACO who accept Medicare. It won’t affect your Medicare costs.

Last Modified: August 5, 2021

6 Cited Research Articles

  1. U.S. Centers for Medicare & Medicaid Services. (2021, January 14). Accountable Care Organizations (ACOs): General Information. Retrieved form https://innovation.cms.gov/innovation-models/aco
  2. U.S. Centers for Medicare & Medicaid Services. (2020, February 11). Accountable Care Organizations (ACOs). Retrieved from https://www.cms.gov/Medicare/Medicare-Fee-for-Service-Payment/ACO
  3. Gold, J. (2015, September 14). Accountable Care Organizations, Explained. Retrieved from https://khn.org/news/aco-accountable-care-organization-faq/
  4. Muhlestein, D. (2015, March 31). Growth and Dispersion of Accountable Care Organizations in 2015. Retrieved from https://www.healthaffairs.org/do/10.1377/hblog20150331.045829/full/
  5. American Hospital Association. (n.d.). Accountable Care Organizations. Retrieved from https://www.aha.org/accountable-care-organizations-acos
  6. National Association of Accountable Care Organizations. (n.d.). Welcome. Retrieved from https://www.naacos.com/