Accountable Care Organizations (ACOs) represent a shift away from the fee-for-service method of healthcare towards delivering more coordinated and efficient healthcare to patients. The Centers for Medicare and Medicaid Services (CMS) defines an ACO as “a network of doctors and hospitals that shares financial and medical responsibility for providing coordinated care to patients in hopes of limiting unnecessary spending,” by reducing hospital stays, emergency room visits, and expensive tests. Under the ACO model, providers have a degree of financial responsibility in the health of their patients.
In theory, when providers keep patients healthy, they get to share in the savings. For example, if a doctor has a diabetic patient and helps keep his blood sugar levels at a healthy level, the doctor could receive a cost-savings payout. Alternatively, if the patients do not maintain healthy blood sugar levels, the doctor would be at “risk of losing money if their ACO does not meet quality and cost-savings requirements.” Not all ACOs are the same. CMS has created different ACO models, including the Advanced Payment Incentive, Pioneer ACO demonstrations, and the Medicare Shared Savings ACO program. Each of these models represents a different level of financial risk and reward for the provider. Through a combination of these and other private sector initiatives the, approximately 14 percent of Americans receive care through an ACO. However, ACOs are still a work in progress. In July, nearly one-third of the 32 original Pioneer ACOs dropped out of the program, reducing the number of Pioneer ACOs to 19.
The Pioneer ACO model focuses on “a shared savings payment arrangement with higher levels of savings and risk than in the Shared Savings Program.” Seven of the organizations opted to join the less risky Medicare Shared Savings Program, while the others chose to leave the ACO program entirely. But there have also been positive developments in the efforts to cultivate a more coordinated and efficient approach to healthcare. According to CMS, all 32 Pioneer ACOs improved quality and performed better than fee-for-service Medicare in 15 quality measures, resulting in gross savings of $87.6 million in 2012. It will be important in the coming years to see how the ACO model of healthcare delivery evolves. The ACO has the potential to improve the quality of care while reducing healthcare spending, but will mean re-imagining the current healthcare system as it exists today.