Key Takeaways

  • Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers who organized voluntarily to be jointly responsible for managing the quality and cost of a targeted Medicare patient population.

  • ACOs are good candidates for offering or making referrals to evidence-based programs because they are designed to address both clinical and social determinant of health services as part of the person-centered planning care management model. 

ACOs are focused on the provision of coordinated, high quality care to their Medicare patients—especially those who are chronically ill, elderly, and disabled—who are in not enrolled in a Medicare Advantage program. Patients may opt to enroll in an ACO (voluntary) and also have the ability to opt out at any time, for any reason. ACOs are part of the Affordable Care Act legislation under the framework of the Medicare Shared Savings Programs.

Consumers might be attracted to participating with an ACO for several reasons. They may be recruited by their primary care provider who is affiliated with the ACO (ACO providers are required to notify their patients of their ACO status). Consumers may decline ACO enrollment. They may be referred by the hospital staff where they receive frequent services. Consumers are usually free to see doctors of their choice outside the network without paying more. Consumers seeking a more person-centered approach to health care delivery may find that the holistic approach to care offered by the ACO is an attractive alternative to the lack of coordinated care in a fee-for-service model.

The goal of coordinated care is to ensure that patients, receive the “right care at the right time and in the right place.” This frequently means providing treatment in community settings when possible, instead of institutions, like hospitals or skilled nursing facilities. ACOs are on a mission to avoid unnecessary duplication of services and to reduce or prevent medical errors. While ACO providers are often paid fee-for-service rates, they are being paid based on a pre-determined budget for total cost of health care, which leads to an incentive for cost effective and evidence-based care. This includes all covered Medicare Part A & B services, such as: physician services, hospital admissions, diagnostic testing, outpatient procedures, and medical equipment. ACOs are structured to create an incentive to be more efficient by offering bonuses when providers keep costs down. They must carefully manage consumers with chronic conditions, focusing on prevention, to impact utilization of services and reduce overall costs of care. Additionally, providers and hospitals that participate in an ACO must meet specific quality benchmarks, focusing on prevention and carefully managing patients with chronic diseases. The primary emphasis for care management practices in ACOs is patient-centered care, keeping consumers healthy and out of the hospital.

If an ACO is unable to reduce the cost of care, there are no savings to share. This could adversely affect their operating budget, such as costs of investments made to improve care, e.g., adding staff/resources. An ACO also may have to pay a penalty if it doesn’t meet quality and cost savings benchmarks. (Learn more about the Shared Savings and Losses and Assignment Methodology.)

ACOs that are successful delivering both high-quality care and reducing health care costs can share in the savings accrued by the Medicare program. By meeting the tenets of their ACO agreements with the Centers for Medicare and Medicaid Services (CMS)—and reducing health care costs through reductions in costly institutional care through more preventative engagement with consumers—ACOs can reap significant savings and maximize their Medicare incentives. While ACOs must be organized according to rules established by CMS, several ACO program models can be used:

Accountable Health Care Communities Model

In addition to ACOs, CMS introduced the Accountable Health Communities Model.  Though there are just over 30 of these unique organizations nationwide, they address an important aspect of integrated care—social determinants of health (SDOH). SDOH include unmet social needs such as food insecurity and inadequate or unstable housing, which potentially:

  • Increase the risk of developing chronic conditions;
  • Reduce consumers’ ability to manage these conditions; and
  • Lead to avoidable health care utilization and an increase in health care costs.

This model emphasizes engagement of both clinical and SDOH services as part of the person-centered planning care management model.  By identifying and addressing the SDOH needs of targeted consumers, this innovative approach can reduce health care utilization and positively impact health care costs.

This model will promote clinical-community collaboration through:

  • Screening of community-based consumers to identify key unmet SDOH needs;
  • Provision of referrals and navigation support for community-based consumers to increase awareness of and access to community services; and
  • Encouragement of alignment between clinical and community-based organizations to ensure that community services are available and responsive to the needs of targeted community-based consumers.

It is important to note that while the ACO construct is based on CMS rules and regulations, CMS allows flexibility so that each community ACO may differ in structure, payment models, and other characteristics. The Medicare provisions for ACO certification provides for adequate flexibility in the design of the ACO structure—allowing them to create programs and services that meet the unique needs of their communities and consumers. Some of these ACO models offer incentives for efficient high quality care and are not penalized for exceeding their budget or care. If an ACO can come in under budget while still meeting quality metrics, they may receive a bonus payment from Medicare.

Shared savings ACO quality measures are segregated into four key domains and include over 30 metrics.  These domains serve as the basis for assessing, benchmarking, rewarding, and improving ACO quality performance.  Each of the 4 domains are equally weighted and account for 25 percent of an ACO’s quality score. 

The four domains include:

  1. Patient/caregiver experience
  2. Care coordination/patient safety
  3. Preventative health
  4. At-risk populations

Why Partner with an ACO?

Older adults are the predominant population of Medicare beneficiaries. They are also among the nation’s most vulnerable and costly populations affected by chronic disease.  As such, many ACOs are seeking opportunities to provide prevention and wellness services to improve the management of their patients’ chronic conditions. Studies have shown that personal behavior impacts health outcomes by 30-40%. Therefore, it is important to offer evidence-based Chronic Disease Self-Management Education (CDSME) programs that increase patient awareness and build skills that address healthy diets, smoking, physical activity, substance use, and more.

CDSME programs are evidence-based. They have been shown to engage and motivate patients so that they are more involved in their care, increase their self-efficacy for symptom and health care management, and improve a number of measures related to health status, health care and costs. CDSME programs are well suited to help improve the status of high risk patients because they are: peer-led, provide a supportive environment to facilitate change, and empower patients to take charge of their health.

ACOs are designed to foster patient involvement, patient education, and self-management support. They play an important role in encouraging patients to keep appointments, attend health education activities, and self-manage their medical conditions.  Moreover, as noted earlier, ACOs must meet quality of care metrics in order to qualify for bonuses.  For example, patients with diabetes mellitus, have specific prevention measures that must be completed annually.  Self-management programs can help to motivate patients to complete these screenings in a timely manner which, in turn, enhances the quality scores for the ACOs.  In addition, ACO patients are surveyed annually. The Consumer Assessment of Healthcare Providers and Systems (CAHPS) is administered by independent organizations approved by CMS.  There are a myriad of CAHPS survey versions which are specific to the kind of organization being evaluated. ACO consumers complete the Clinical & Group version of CAHPS. CAHPS surveys measure a broad swath of consumer satisfaction topics.

Measures most likely to be impacted by CDSME programs include:

  • Provider support for managing chronic conditions;
  • Provider-consumer communication;
  • Health Promotion and education;
  • Health status and functioning; and
  • Help taking prescribed medications.

Considering all of these factors, ACOs are good candidates for offering or making referrals to evidence-based workshops.  However, before referrals can be made, the ACO and the community-based organizations need to establish a contract and a business associate agreement in order to share patient data. The ACO will issue their own contract and business associate agreement for the community-based organization to review and execute.

Helpful Resources