Introducing the latest acronym – ACO

In 2012 Accountable Care Organizations (ACO) were established due to the Patient Protection and Accountable Care Act (ACA) being signed by President Obama.  Medicare and Medicaid Services (CMS) are to create Medicare Shared Savings program (MSSP), which allows for the establishment of ACO contracts with Medicare.

An ACO is a network of doctors and hospitals that will share responsibility for providing care to patients. One of the requirements is that the ACOs will have to manage all of the health care needs for patients for at least three years.  A benefit of the ACOs is  they would make sure that the care of the patient, including primary care, specialists, hospitals, and home health care, would all come together for the value of the patient.  The Patient Protection and Affordable Care Act (PPACA) requires Centers for Medicare and Medicaid Services (CMS)to use ACOs to work with doctors and hospitals to get better outcomes and have them focus on keeping down the cost of care.

ACOs will be responsible for providing complete health services for patients. They will work with and offer doctors and hospitals financial incentives to provide quality care to patients while maintaining or lowering costs. They will also review any unnecessary medical care performed on patients to help keep cost down.

ACOs have already started to come together.  According to Kaiser Health News, “Hospitals, physician practices and insurers across the country, from New Hampshire to Arizona, are announcing their plans to form ACOs, not only for Medicare beneficiaries but for patients with private insurance as well.  Some of the largest health insurers in the country, including Humana, United Healthcare and Cigna, already have announced plans to form their own ACOs. Insurers say they can play an important role in ACOs because they track and collect data on patients, which is critical for coordinating care and reporting on the results.”

The guidelines for establishing an ACO can be found in Section 3022 of the PPACA. These guidelines are the necessary steps that physicians, hospitals and other health care providers must complete in order to participate. Below are the some of the requirements for ACOs:

  • The ACO shall be willing to become accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it;
  • The ACO shall enter into an agreement with the Secretary to participate in the program for not less than a 3-year period;
  • The ACO shall have a formal legal structure that would allow the organization to receive and distribute payments for shared savings to participating providers of services and suppliers;
  • The ACO shall include primary care ACO professionals that are sufficient for the number of Medicare fee-for-service beneficiaries assigned to the ACO under subsection;
  • At a minimum, the ACO shall have at least 5,000 such beneficiaries assigned to it in order to be eligible to participate in the ACO program;
  • The ACO shall provide the Secretary with such information regarding ACO professionals participating in the ACO as the Secretary determines necessary to support the assignment of Medicare fee-for-service beneficiaries to an ACO, the implementation of quality and other reporting requirements under paragraph (3), and the determination of payments for shared savings under subsection (d)(2);
  • The ACO shall have in place a leadership and management structure that includes clinical and administrative systems;
  • The ACO shall define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies;
  • The ACO shall demonstrate to the Secretary that it meets patient-centeredness criteria specified by the Secretary, such as the use of patient and caregiver assessments or the use of individualized care plans;
  • The ACO participant cannot participate in other Medicare shared savings programs;
  • The ACO entity is responsible for distributing savings to participating entities;
  • The ACO must have a process for evaluating the health needs of the population it serves;

Hopefully the future of the ACOs will help providers be able to develop better patient standards and minimize redundant medical cost.  Only time will tell if the proposed resolution of ACOs will succeed or not.  It is truly up to the ACOs to be accountable for the actions of our health care future.

PPACA: HHS Tries to Sweeten ACO Program
Accountable Care Organization (“ACO”) Analysis; Gary J. McRay & Nicole E. Stratton, Foster Swift Health Care Law E-News,
April 5, 2011
Shared Savings Program
Accountable Care Organizations, Explained by Jenny Gold
Patient Protection and Affordable Care Act of 2010, Pub. L. No. 111-148, §3022 124 (2010).
Gold J. Accountable Care Organizations, Explained. Kaiser Health News, NPR. Jan 18, 2011.
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About Denise Kaiser

Mrs. Kaiser is an analytical consultant providing financial analysis, vendor evaluations, market & compliance analysis, as well as national industry trending for group employers.

View all posts by Denise Kaiser

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