The term “Accountable Care Organization” was first used by Elliott Fisher in 2006 during a discussion of the Medicare Payment Advisory Commission. The term was included in the federal Patient Protection and Affordable Care Act. It resembles the definition of Health Maintenance Organizations (HMO) that emerged in the 1970s. Like an HMO, an ACO is “an entity that will be ‘held accountable’ for providing comprehensive health services to a population.” The model builds on the Medicare Physician Group Practice Demonstration and the Medicare Health Care Quality Demonstration, established by the 2003 Medicare Prescription Drug, Improvement and Modernization Act.
Medicare approved 32 Pioneer accountable care organizations in December 2011; of which 19 remained active through 2015. As of April 2015, Medicare had approved 404 Medicare Shared Savings Program (MSSP) ACOs, covering over 7.3 million beneficiaries in 49 states. For the 2014 reporting period, MSSP ACOs saved a combined $338 million, or $63 per beneficiary.
An accountable care organization (ACO) is a healthcare organization that ties payments to quality metrics and the cost of care. ACOs in the United States are formed from a group of coordinated health-care practitioners. They use alternative payment models, normally, capitation. The organization is accountable to patients and third-party payers for the quality, appropriateness and efficiency of its services. According to the Centers for Medicare and Medicaid Services, an ACO is “an organization of health care practitioners 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 model places financial responsibility on providers in hopes of improving care management and limiting unnecessary expenditures, while providing patients freedom to select their medical service providers. ACO’s model of fostering clinical excellence while simultaneously controlling costs depends on its ability to “incentivize hospitals, physicians, post-acute care facilities, and other providers involved to form linkages and facilitate coordination of care delivery”. By increasing care coordination, ACOs were proposed to reduce unnecessary medical care and improve health outcomes, reducing utilization of acute care services. According to CMS estimates, ACO implementation as described in ACA was estimated to lead to an estimated median savings of $470 million from 2012–2015.
- Provider-led organizations with a strong base of primary care that are collectively accountable for quality and per capita costs across the continuum of care
- Payments linked to quality improvements and reduced costs
- Reliable and increasingly sophisticated performance measurement, to support improvement and provide confidence that savings are achieved through care improvements.
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