Primer: What Is An ACO And Why Should I Care?

ACOs are hot. They were the topic of a major federal meeting yesterday. Today they are on the agenda of the Massachusetts panel that’s charged with revamping the health care payment system. Another state panel has already recommended heading toward them. They are causing many concerns. Your health care organization may try to become one. So what are they?

ACO stands for “Accountable Care Organization.” From there, it gets a little amorphous, so amorphous that the confusion — combined with strong federal incentives to go ACO — inspired this hilarious video, already viewed more than 20,000 times:

So I asked Martha Bebinger, WBUR’s great maven on all things health care, for her simplest, most minimalist definition:

Her response:

Picture one system that offers and coordinates all the health care you need. The most important person in the system is your primary care doctor. When you need something he or she can’t provide, your doctor refers you to a cardiologist or cancer specialist or eye doctor and continues working on your case with that specialist. You would get all the tests you need within the same health system and go to a hospital, if needed, all under the same health care umbrella. That’s an ACO, everything you need under one umbrella. Patients can get care outside the umbrella, but it would probably cost more.

Some patients love the idea of a “home” and someone who guides them through the health care system. Other patients don’t like the idea of limiting where they can go for care. Some doctors like and are comfortable collaborating on a patient’s care. Others say “team” care is unwieldy. And then there are the financial challenges of making a health care system that offers all things to all people work.


If your eyes don’t glaze over when you hear words like “capitation,” here’s an excellent briefing on ACOs from Health Affairs. Kaiser Health News does its simpler, more accessible version here. At its core:

In the existing fee-for-service payment system used by Medicare and most private insurers, doctors get paid more by giving more services, and hospitals make more by increasing admissions. With ACOs, doctors and hospitals would get paid based on their ability to hold down overall costs and meet quality-of-care indicators. In effect, their pay would be based on improving care, not driving more of it.
If the ACOs fail to meet certain quality and cost savings targets, the providers in the ACO would face lower payments from Medicare. On the flip side, the ACOs would also be awarded for keeping patients happy and meeting national quality standards such as making sure diabetics get regular foot exams and women get their annual mammograms.
In effect, ACOs are an attempt to buid integrated health systems like the Mayo Clinic where none exist. But Mayo took several decades to become a global destination for health care. The studies of ACOs called for in the congressional proposals aim to see if one can be formed in a year or two.

Here’s yet another take, from today’s Huffington Post. Dr. Paul Grundy, IBM’s director of health care, technology, and strategic initiatives, writes:

In ACOs, doctors are accountable for improving the health of their patients. ACOs tap into existing communities of physicians and other health professionals in order to build a stronger team culture. In these practices, doctors are rewarded for meeting targets that improve outcomes and lower costs. Their benchmarks are set to regional, not national standards, so that local factors impacting health can be taken into account.

And he adds: I am eager to see the results from the pilot studies now underway. I believe the ACO concept, allied with the medical home model, has the potential to transform U.S. health care.

Note: This primer is a work in progress. Contributions in comments welcome!

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  • Bud

    More of our tax money going for people to administer these programs. Any time the government steps in to our lives it cost more money. Let people have access to health insurers all across the country, not just in the state. That will being down cost.

  • Ecs

    DR.’s are going to win either way. With open insurance they OVER treat—-with ACO’s they UNDER tereat.!!!!!!  DOCTOR’S ARE THE PROBLEM!!!!!!!!!!!   They choose who gets treatment and who doesn’t.  They play  GOD!!!!!!!!!!!!!!

  • Ed

    ACO’S—-More Bonuses to DR. and Clinics ——- LESS care for the patients !!!!!!!!!!!!!!!!!!!!!!!!!   I know it’s what I’m going through right NOW.!!!!!  Dr.’s just REFUSE to treat you so they get a BONUS!!!!!!!!!!!  It’s all BULLLLLLLL

  • Randygrenier

    I think what’s important is that new payment models are emerging.  Doctors and practices will get paid for overall quality of care rather than fee for service.  Care quality would be measured by various criteria documented in the electronic health records.  If this can be made feasible, it would definitely be in the best interest of the consumer. 

  • Richard

    ACO? This is just a new moniker for an already tried and failed concept, HMO. Why do you think so many are so fed up with Obamacare and that entire concept. Instead of improving the quality of care, they are destroying it. The whole idea of keeping down costs, leads to the rationing of health care, plain and simple. The only ones in favour of this garbage are the idiots in academia, who don’t have the wherewithall to make it in private practice.

    • Admin

      “Obamacare” at the right calls it…. is not responsible for the healthcare crisis int his country… Nor is it responsible for HOM’s … you’d have to go back to Nixon for that one…. Neither, would I say that most academics are in favor of HMO models somply because most intelligent people with an interest can easily make themselves aware of the facts both here and internationally. The plain truth is that The US does not fair even remotely well in relation to other OECD nations in the delivery or care, the preservation of the health of its citizens or the management of cost. Study after study has found that profit incentives in the system are chiefly responsible for deterioration in the quality of service and the resultant poor statistical markers…

  • Darrylhenry

    Paul Grundy grinds on as if there were some expertise there
    from my personal experience sand first hand knowledge. U.S. Health care is nearly as good as it can be with the single exception of conerns regarding how much one makes vice how much personal integrity is demonstrated. All of us have been taught, and I believe completely that the skills I have are best used not for my own personal gain, although I am entitled to reward for all my hard work
    I guess that means , I have to call into discussion, what a “reward” is.

  • http://twitter.com/PCPCC paul grundy

    As it is structured now the U.S. health care system has been failing us for years, “U.S. Life Expectancy continues to Fall Behind Other Countries Despite spending the most on health care, the United States continues to lag behind other nations when it comes to gains in life expectancy—and commonly cited causes for the nation’s poor performance are not to blame, a new Commonwealth Fund–supported study out 10/9/2010 finds. Forty-five year old Americans 15-year survival rates were lower than that of all the other countries. The researchers say that the failure of the U.S. to make greater gains in survival rates despite its greater spending on health care may be attributable to flaws in the overall health care system, specifically the role of unregulated fee-for-service payments and an over reliance on rescue/specialty care and the failure to have robust primary care.”

    http://www.commonwealthfund.org/Content/Publications/In-the-Literature/2010/Oct/What-Changes-in-Survival-Rates-Tell-Us.aspx

  • http://twitter.com/PCPCC paul grundy

    the U.S. health care system has been failing us for years, “U.S. Life Expectancy continues to Fall Behind Other Countries Despite spending the most on health care, the United States continues to lag behind other nations when it comes to gains in life expectancy—and commonly cited causes for the nation’s poor performance are not to blame, a new Commonwealth Fund–supported study out 10/9/2010 finds. Forty-five year old Americans 15-year survival rates were lower than that of all the other countries. The researchers say that the failure of the U.S. to make greater gains in survival rates despite its greater spending on health care may be attributable to flaws in the overall health care system, specifically the role of unregulated fee-for-service payments and an over reliance on rescue/specialty care and the failure to have robust primary care.”

  • Brian
  • Barbara M Moran

    I don’t understand how an ACO would be different for me, the consumer, because – let’s face it – that’s all I really care about. Right now I’m in an HMO and my PCP makes referrals, and I go where she tells me and pay extra for out-of-network providers. So it seems like an ACO would be the same thing…? (What I really need is someone to pay for my massage therapist, gym membership, and overpriced organic gluten-free cornflakes. Anybody gonna do that? No, I didn’t think so.)

    • Fcv

      I guess you didn’t read the article.

    • Fcv

      I guess you didn’t read the article.