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What Are Accountable Care Organizations?

There’s yet another acronym in the healthcare world that we’ve been hearing often. According to the Centers for Medicare & Medicaid Services (CMS), Accountable Care Organizations, or ACOs are “a group of doctors, hospitals and other health care providers who come together voluntarily to give coordinated high-quality care to their Medicare patients.  The goal is to ensure that patients get the right care at the right time while avoiding unnecessary duplications of services and preventing medical errors.”

Essentially, ACOs are a network of healthcare providers helmed by a Medicare fee-for-service patient’s primary care physician that all share information about the patient. Instead of seeing one doctor here and one doctor there and having to obtain records and experience gaps in care, healthcare providers within an ACO all have access to the same information. These groups are not insurance-based, so although a provider might refer a patient to another within the ACO, the patient isn’t required to see only providers within that ACO.

Hospitals have been under pressure to better care for patients and reduce costs since the 2012 passage of the CMS’  Hospital Readmissions Reduction Program (HRRP). The program seeks to cut down on the number of hospital readmissions within 30 days of discharge, namely by slashing their reimbursements paid to hospitals. It is the very real threat of reduced payments, as well as the lure of shared savings bonus from CMS that has led many hospitals and health networks to band together to form ACOs.


Number of ACOs Growing, but Will They Last?
Since 2016, the number of ACOs has steadily risen. In 2016, there were 433, while by 2017 that number had  grown to 480. This year, 561 ACOs are in operation, including 46 of them right here in Illinois. Hospital groups such as Northwestern, University of Chicago, Rush, Advocate, and Ingalls all take part in ACOs, although this does not mean that every provider affiliated with these hospitals is necessarily within an ACO. In Northwestern’s ACO, officially titled ‘Northwestern Medicine Physician Partners,’ a patient can find various specialties from gastroenterologists, to obstetrician/gynecologists, and dermatologists.

While theoretically these groups sound like a healthcare utopia, there is no hard proof that patients who only receive care through ACO providers have better health outcomes. Some studies have found that those who are cared for within an ACO face fewer hospitalizations, but so far there is no conclusive evidence. For those healthcare networks and providers that have formed an ACO, it is estimated that less than 1/3 have actually received the cost savings bonus from CMS.

Healthcare economists also are concerned that the sickest patients require the most care and more hospital visits, potentially causing ACOs to weed out patients that would drag down their ability to reduce costs and ultimately earn a savings bonus. Further worrying experts is what happens to those patients who also occasionally see an out-of-town provider (for example those that spend time in warmer climates over winter). These primary care physicians and specialists are not linked into the same ACO network and information sharing system as the patient’s hometown providers, so the coordination of care benefit is immediately lost. Finally, if hospitals are behind ACOs and a hefty amount of their income comes from hospital admissions and the tests and service provided during that visit, how likely are they to discourage hospitalizations?

It’s not yet clear what the future of ACOs will be, but despite their growing popularity, the quality of care and health outcomes do not seem to be achieving the level of success that CMS had hoped.