Frequently Asked Questions About Accountable Care Organizations

ACO is an acronym for Accountable Care Organization and it is a term that’s commonly used in the healthcare industry.  The origin of accountable care organizations can be traced back to The Affordable Care Act. The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). And so this is how ACO Healthcare came about. As with many things involving the affordable care act and Medicaid, there is usually some confusion among healthcare practitioners because of the plethora of rules and changes required in order to fit this new systems and the rules that they come with. Today, we are going to tackle some frequently asked questions to help you be better equipped for ACO healthcare.

The following is found on Physicians for a National Health Program website and addresses many of the questions that healthcare professional and others have sought after.  The collection of questions and answers help to define and understand the characteristics involved with Accountable Care Organizations.


Question: What forms of organizations may
become an Accountable Care Organization?


Answer: The statute specifies that these groups can become ACOs:

  1. Physicians and other professionals in group practices
  2. Physicians and other professionals in networks of practices
  3. Partnerships or joint venture arrangements between hospitals and physicians/professionals
  4. Hospitals employing physicians/professionals
  5. Other forms that the Secretary of Health and Human Services may determine appropriate.


Question: What are the types of
requirements that such an organization
will have to meet to participate?


Answer: The statute specifies the following:

  1. Have a formal legal structure to receive and distribute shared savings
  2. Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
  3. Agree to participate in the program for not less than a 3-year period
  4. Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
  5. Have a leadership and management structure that includes clinical and administrative systems
  6. Have defined processes to (a) promote evidence-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
  7. Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.



Question: How would such an organization
qualify for shared savings?


Answer: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount.

The benchmark for each ACO will be based on the most recent available three years of per-beneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.


Question: What are the quality
performance standards?


Answer: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Question: Will beneficiaries that receive
services from a health care professional
or provider that is a part of an ACO be
required to receive all his/her services
from the ACO?


Answer: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.


Question: Will participating ACOs be
subject to payment penalties if their
savings targets are not achieved?


Answer: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.


Though this is a small list of answers and probably doesn't address the majority of questions that you many have, it is a beginning step and one that will aid in moving forward on the path toward becoming an Accountable Care Organization within the healthcare industry.  Please make sure to do more research to fully integrate the requirements and meet regulations that have been established.  Many healthcare organizations have dedicated teams to establishing these aspects.