Population Health Education

What Is an Accountable Care Organization (ACO)?

An Accountable Care Organization is a network of physicians, hospitals, and other healthcare service providers who come together to improve the quality of patient care while reducing cost and errors. Providers who participate in an Accountable Care Organization receive bonuses for keeping patients—especially those with multiple chronic conditions—healthy. An Accountable Care Organization should be able to administer payments, set benchmarks, measure performance, and distribute shared savings.

Download the Better Financial Health for Physicians fact sheet

Unlike an HMO, an Accountable Care Organization doesn't require the patient to stay within the network.

An Accountable Care Organization can be either administered by the government or privately held. Per Centers for Medicare and Medicaid Services (CMS) guidance, Accountable Care Organizations are a formal legal structure that allows for receiving and distributing payments. CMS Medicare Shared Savings Program (MSSP) Accountable Care Organizations must have:

  • Sufficient primary care capacity to manage at least 5,000 Medicare beneficiaries
  • A leadership and management structure that includes clinical and administrative systems

Improving Quality of Care

  • Accountable Care Organization allows multiple providers to share information and create a more holistic view of the patient. This helps patients receive the right care at the right time
  • For patients with multiple chronic conditions, data sharing within the Accountable Care Organization shifts the burden of coordinating healthcare from the patient to the more qualified care management team

Reducing Costs

  • A more well-rounded view of patient's health allows providers to predict problems before they occur. This reduces the need for potentially expensive future treatments and helps keep patients out of the hospital
  • Sharing clinical data across the Accountable Care Organization decreases duplication of expensive tests and procedures

Learn more about building a sustainable Accountable Care Organization.

Next: What is a Patient Centered Medical Home?

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