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What is an accountable care organization (ACO)?

An accountable care organization (ACO) is a network of doctors, hospitals, or other healthcare providers who voluntarily come together to provide coordinated care to a given patient population. This type of coordinated care delivery ensures that patients—especially those living with chronic conditions—receive the care they need when they need it. More than that, it also helps to prevent providers from unnecessarily duplicating services or making medical errors.

In October 2011, the Centers for Medicare and Medicaid Services (CMS) established accountable care organizations under the Medicare Shared Savings Program (MSSP). Accountable care organizations who elect to participate in the MSSP agree to share both financial and medical responsibility for an assigned Medicare fee-for-service patient population.

CMS has offered several other different types of accountable care organization programs since the Medicare Shared Savings Program was developed. These Medicare programs include:

  • The ACO Investment Model
  • The Next Generation ACO Model
  • The Medicare-Medicaid ACO Model

Since the inception of ACOs, they have expanded to serve patients in private or commercial payer settings in addition to Medicare and Medicaid patients.

Why are accountable care organizations (ACOs) important in healthcare?

Accountable care organizations are important because they work to improve care quality and reduce healthcare costs. The goal of this value-based, risk-sharing model is to achieve the “triple aim” of healthcare:

  • Improved patient satisfaction and experience
  • Improved population health, and
  • Reduced per capita healthcare costs

Providers within an accountable care organization are required to meet specific benchmarks and are rewarded when they are able to maintain high care quality and low care costs. When an ACO succeeds in keeping their patients healthy and spending healthcare dollars more wisely, the organization will share in the savings that it earns for the Medicare program.