ACOs: How They Work

There are plenty of different acronyms and titles within the healthcare industry – it’s a veritable alphabet soup – and profession, and ACO is one of them, and you may not have come across it before. It stands for Accountable Care Organizations, which are a group of healthcare professionals and practitioners, voluntarily coming together to provide a high-quality level of coordinated care. Here are a couple of basic pieces of information about Accountable Care Organizations, what they do and who they are aimed at.

What is it?

Typically, accountable care organizations consist of a voluntary team of medical and healthcare professionals, working together to deliver high-quality, coordinated care to a group of people. The term was originally coined in 2006, and was added to the federal Patient Protection and Affordable Care Act in 2009. ACOs seek to provide a high level of medical care to a population, reduce medical costs and spending, and be accountable for providing comprehensive services.

The Patient Protection and Affordable Care Act was implemented in an attempt to make health coverage more equal and easier to understand, expand the Medicare program and make coverage easier to obtain and less costly.

Who is it for?

ACOs primarily provide care to their Medicare patients, with the aim of ensuring that patients receive the correct treatment at the correct time, healthcare budgets are wisely spent and medical errors are prevented. The ACO’s Chief Financial Officer can use analytic software to measure the success of programs and initiatives, to ensure that the ACO is achieving its aims.

How does it work?

ACOs use alternative payment options, with one common option being capitation. At its most basic, capitation in the process in which a healthcare service receives a certain amount of money per patient per unit of time in advance, regardless of whether a patient seeks medical attention during this period or not. The amount received depends on a variety of factors, such as the range of services being provided, the number of patients and the period of time over which the services are being provided.

With this option, there is some financial risk to the physician but in order to ensure that suboptimal care is not delivered, the resource utilization rates are analyzed and released to the public. This means that the data is readily available and transparency in key, and that healthcare costs are controlled while still delivering a high level of quality care to patients. There is a risk pool,consisting of a percentage of the capitation amount, which is used either to cover deficit expenses if a health plan has gone poorly, or paid to the physician if it has succeeded.

It is worth asking your primary care provider about ACOs, and if you work in the medical industry, you may be able to volunteer to become part of your entity’s Accountable Care Organization in order to help reduce healthcare costs and spending, and to continue providing high-quality care and services to all of your patients.