Accountable Care Organizations (ACOs)
Accountable Care Organizations (ACOs) are collaborative networks of healthcare professionals, including primary care providers, specialists, and hospitals, that aim to coordinate patient care effectively while managing costs. Established as a response to rising healthcare expenses, particularly for Medicare patients with chronic conditions, ACOs focus on delivering high-quality care by reducing redundant tests and unnecessary procedures. Formally integrated into the Affordable Care Act of 2010, ACOs must manage the care of at least 5,000 Medicare patients for a minimum of three years.
These organizations are monitored by government agencies to ensure compliance with quality care standards and to document savings generated for the Medicare system. When successful in reducing costs, ACOs may receive shared savings bonuses as an incentive. Statistics indicate a growth in ACOs, with over 1,000 covering more than 32 million patients by 2022, and evidence suggests significant savings were generated, totaling $1.8 billion. However, the model has faced criticism, with some arguing that it may limit patient choice and potentially compromise the independence of healthcare providers. The debate surrounding ACOs continues, reflecting diverse perspectives on their effectiveness and long-term viability in the healthcare system.
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Accountable Care Organizations (ACOs)
An accountable care organization (ACO) is a concept in health care in which a complex of health care professionals—primary care providers, specialists, hospitals—agree to coordinate information, health care regimens, and payment plans to make the care of patients more efficient, less aggravating, and less expensive. ACOs are accountable both for providing coordinated quality care and managing the overall costs of care for their patients. ACOs are supervised by government agencies to make sure the treatment plans are being adequately coordinated and fulfill quality of care requirements. ACOs must also file government paperwork showing how much money they were able to save the Medicare system. As an incentive, ACOs receive a shared savings bonus equal to a percentage of the money they saved.
Without the network principle of ACOs, a patient can be left responsible for coordinating their own heath care—if the patient has heart irregularities, for instance, the patient seeks out (or is referred to) a variety of cardiac specialists often located in different facilities. Because those doctors do not share information or diagnoses, and in fact are often in competition with each other for fees, which are paid on a fee-for-service basis, patients can face redundant tests and unnecessary regimens. These extra tests and regimens also escalate care costs paid by Medicare, insurance companies, and patients. The result is more care, rather than better care. When those same doctors and specialists agree to coordinate their work within an ACO, however, such redundancies are eliminated, and care providers can deliver both quality care and cost savings.
Overview
First proposed as a theoretical model for improved health care as a way to combat ballooning health care costs—particularly for those with chronic illnesses and those under long-term treatment plans under Medicare—the concept of an ACO was made an integral part of the controversial 2010 Patient Protection and Affordable Care Act, known popularly as either the Affordable Care Act (ACA) or Obamacare. Under the ACA, ACOs must manage the care of at least five thousand Medicare patients for a minimum of three years, in addition to their other patients.
The ACO model was touted as a way to both improve health care and bring down costs. The Centers for Medicare and Medicaid Services reported that according to 2014 quality and financial performance results, 353 Medicare ACOs in two different programs, the Pioneer Model and Medicare Shared Savings Program, generated a total savings of $411 million and that 97 of the ACOs qualified for shared savings payments of more than $422 million. However, the ACO programs caused the Medicare trust fund to accrue a net loss of $2.6 million. By the first quarter of 2015, the total number of ACOs had grown to 744, covering a total of 23.5 million individuals, and those numbers continued to grow. By 2022, just over one thousand ACOs covered more than 32 million patients. At that time, reports indicated that the programs generated Medicare savings of $1.8 billion. Physician participation in ACO programs also grew during this period. In 2022, nearly 60 percent of doctors surveyed by the American Medical Association said they were part of an ACO, an increase over 44 percent of doctors in 2016.
Opponents of the ACA suggest the government estimates are more driven by politics, and that ACOs represent more interference from government in medical treatments. These opponents suggest that ACOs will, in the long run, eliminate choice in health care by driving doctors who prefer to remain independent providers out of the market and may even encourage those doctors who do participate to take shortcuts simply as a way to handle the inevitable increase in the number of patients. Others are skeptical about the cost savings ACOs will provide over time.
Bibliography
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"Are Medicare ACOs Working? Experts Disagree." Kaiser Health News. Kaiser Family Foundation, 21 Oct. 2015. Web. 11 Aug. 2016.
Crosson, Francis J. "The Accountable Care Organization: Whatever Its Growing Pains, the Concept Is Too Vitally Important to Fail." Health Affairs 30.7 (2011): 1250–55.
Gold, Jenny. "Accountable Care Organizations, Explained." Kaiser Health News. Kaiser Family Foundation, 14 Sept. 2015. Web. 11 Aug. 2016.
Japsen, Bruce. Inside Obamacare: The Fix for America’s Ailing Health Care System. Forbes Media, 2014.
King, Raymond C., et al. The ABCs of ACOs: A Practical Handbook on Accountable Care Organizations. Chicago: American Bar, 2015.
McClellan, Mark. "A National Strategy to Put Accountable Care into Practice." Health Affairs 29.5 (2010): 982–90.
Rittenhouse, D., et al. "Primary Care and Accountable Care—Two Essential Elements of Delivery-System Reform." New England Journal of Medicine 36 (2009): 2301–3.
Robeznieks, Andis. "Nearly 60% of Doctors Work in a Practice That's Part of an ACO." American Medical Association, 30 Oct. 2023, www.ama-assn.org/practice-management/payment-delivery-models/nearly-60-doctors-work-practice-s-part-aco. Accessed 13 Aug. 2024.