Skip to main content

What is an accountable care organization?

iStock 483479497

Accountable care organizations (ACOs) were developed as a way to emphasize accountability among healthcare providers, moving away from the fee-per-visit model and toward value-based care. First coined in 2006, the term was used by Dr. Elliott Fisher during a meeting with the Medicare Payment Advisory Committee (MedPAC), in which he and others “argued that in order to significantly improve quality and costs, accountability for a patient’s care should be shared among all providers along the health care continuum.”

The Centers for Medicare & Medicaid Services (CMS) Innovation Center defines an ACO as a group of “doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve.” ACOs also involve shared responsibility for the cost of healthcare. Through various CMS programs, independent physicians who participate in ACOs are able to potentially share in the savings of that cost with Medicare.

CMS Innovation further explains that “when an ACO succeeds in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for the Medicare program.” Establishing strong partnerships with other physicians within the ACO and coordinating services can result in increased savings for all.

ACO programs within Medicare include:

  • Medicare Shared Savings Program ( – For fee-for-service beneficiaries
  • ACO Investment Model – For Medicare Shared Savings Program ACOs to test pre-paid savings in rural and underserved areas
  • Advance Payment ACO Model – For certain eligible providers already in or interested in the Medicare Shared Savings Program
  • Comprehensive ESRD Care Initiative – For beneficiaries receiving dialysis services
  • Next Generation ACO Model – For ACOs experienced in managing care for populations of patients
  • Pioneer ACO Model – Health care organizations and providers already experienced in coordinating care for patients across care settings

ACOs are growing in number since they were first established after the Affordable Care Act of 2010 was put into place. There are now ACOs in all 50 states.