What Are Accountable Care Organizations?
Key takeaways:
Accountable care organizations (ACOs) are healthcare networks organized by healthcare providers for Medicare beneficiaries.
ACO networks aim to provide high-quality, coordinated care to patients while saving money for Medicare.
Currently, 11 million Medicare beneficiaries are receiving care from ACOs.
Medicare pays for approximately 20% of all U.S. healthcare spending. As more baby boomers become eligible for Medicare, the financial strain on the system grows. In 2020, the government spent over $925 billion on Medicare beneficiaries. In 1970, that figure was just $7.5 billion (or just over $50 billion in 2020 dollars).
To address this problem, the Affordable Care Act (ACA) created accountable care organizations (ACOs). Their mission is to streamline patient care while lowering costs.
Most commonly, ACOs participate in the Medicare Shared Savings Program (though some commercial insurers, especially Aetna, sponsor a few ACOs).
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Today, almost 20% of beneficiaries take part in the nearly 500 Medicare ACO networks spread throughout most states. Your doctor may currently be a member of an ACO network. If you’re enrolled in original Medicare, here's what that means for you.
What is an accountable care organization?
An ACO is a self-selected group of healthcare providers who work together to give high-quality, coordinated care to patients, while also finding ways to lessen the cost of that care.
To create an ACO, healthcare providers must:
Submit an application to the Centers for Medicare & Medicaid Services (CMS).
Provide participation and payment details.
Follow guidelines to ensure patients get quality care.
If your doctor is part of an ACO, you will be notified and assigned to their network. But it’s important to understand that an ACO is not a health insurance plan. Nothing changes with your enrollment in original Medicare (Parts A and B), and you are still free to see any doctor or other specialist who accepts Medicare. (Medicare Advantage enrollees are not eligible to participate in ACOs.)
If you aren't sure whether your doctor is in an ACO, just ask.
What is the purpose of accountable care organizations?
Providers in an ACO set out to deliver patient care more efficiently and effectively. That’s why each ACO provider shares patient health records with all others in their ACO and with Medicare. (If you don’t want your medical information shared in this way, you can request that by calling Medicare at 1-800-633-4227.)
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An ACO’s other goal is to bring down costs within the original Medicare system.
As a fee-for-service plan, original Medicare pays healthcare providers for each treatment or service they deliver. Medicare covers its share of those bills, then you pay your share in the form of copays and coinsurance. This means both the Medicare system and its beneficiaries bear the cost burden of extra medical fees for unnecessary tests and procedures. The ACO tries to minimize that burden by eliminating unneeded workups.
When an ACO network does a good job in bringing down costs, CMS rewards it with incentive payments. Providers share in some of the savings.
Ideally, your ACO’s success helps you as well, in several ways:
Coordinated care helps reduce duplicate tests or unnecessary appointments.
ACOs can help boost preventative screenings. Such screenings can pinpoint illnesses early and save on treatments.
Coordinated care helps remove your burden of recordkeeping. You don't have to remember what information you've shared with which doctor. Every doctor in an ACO has access to all the information.
Many ACOs will provide a point person, such as a nurse. That person is in charge of coordinating your care. They make sure everyone in the network is up to speed on your healthcare needs.
It helps save Medicare money. That can help ensure the Medicare program lasts longer and people keep getting benefits.
According to the ACO model, Medicare cost savings could trickle down to beneficiaries and reduce their expenses.
What is the Medicare Shared Savings Program?
The Medicare Shared Savings Program (MSSP) is the predominant model of ACO in the U.S. Providers coordinate care by sharing patient records and cost information. Through teamwork, they streamline processes, reducing duplicate tests and appointments and cutting unnecessary fees.
As the patient, you have a care coordinator who helps make sure all the providers in your ACO know your needs. So, when you see another doctor or specialist, you won't need to explain your situation or retake tests or exams unnecessarily.
What are the pros and cons of accountable care organizations?
Pros:
Better incentives for doctors: Healthcare providers in ACOs get rewards for providing you with high-quality care and improving your health. The result: They're incentivized to give you preventative screenings, coordinate treatment, and reduce extra fees.
Shared care for patients: Everyone involved in your healthcare is in the loop about your current status. That makes it easier to create a wide-ranging treatment plan and follow through. For example, an ACO can coordinate care if you have a chronic illness, such as heart disease, diabetes, high cholesterol, or blood pressure.
Personalized help in managing your care: In many ACOs, you get a care coordinator who serves as a point person for your treatment. This coordination can help reduce extra tests or keep you from having to bounce around to various doctors and specialists. You’ll also spend less on any out-of-pocket costs not covered by Medicare.
Cons:
No way to opt out unless you change doctors: If your doctor is in an ACO, then so are you. You have no choice in the matter. Or, if your physician isn’t in an ACO, but you really want to be, you’ll have to switch doctors. In some areas of the country, it could be difficult and time-consuming to find a Medicare-friendly doctor who’s also in an ACO.
Data privacy concerns: Everyone in your ACO has access to your personal medical information. So there may be a higher risk of your data being compromised. If you are in an ACO and don't want your information shared, tell your doctor or call Medicare to make an official request.
No guarantee of better care: Numerous studies have examined whether and how ACOs improve patient care. But the data do not point to any clear conclusions.
Do accountable care organizations save you money?
It appears from the data that ACOs save Medicare money. In 2020, the Centers for Medicare & Medicaid Services (CMS) reported MSSP ACOs saved Medicare nearly $2 billion with consecutive years of savings. Another study found ACOs reduce Medicare costs by 1% to 2%.
Another investigation looked ahead to estimate future costs. It found that if higher-spending ACOs could bring down their costs to the median, total savings for Medicare would rise to between 3% to 4%. While that may not seem like much, it adds up to billions of dollars saved.
However, it hasn't been as clear if ACOs save money for patients. It appears most cost savings haven't trickled down enough to make a significant impact. One study found gross savings to be around $390 per Medicare beneficiary. Some ACOs have helped pay for patient transportation to and from appointments, waived consultation fees for patients with COVID-19, and increased the number of telehealth options for patients with mobility issues. But it's debatable if these represent major savings for patients.
How to find accountable care organizations
Ask your doctor if they are part of an ACO. You can also see if there is an ACO near you by checking the map on this CMS page.
The bottom line
The mission of ACOs is to provide more affordable care to Medicare beneficiaries without sacrificing quality. In recent years, they have saved Medicare billions of dollars, but there’s little evidence that the out-of-pocket costs for patients are declining. Still, many participants may benefit from getting coordinated care from their ACO network, especially in rural areas.
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References
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