Simply Explained: Accountable Care Organizations

General, Medicare, News April 24, 2017 0
Simply Explained: Accountable Care Organizations | Senior Market Advisors

What Are Accountable Care Organizations?

Accountable Care Organizations are doctors, hospitals, and other health care facilities that voluntarily participate in Medicare and in some cases, Medicaid. They help Medicare patients with fee-for-service policies get the care they need.

A facility needs to apply to become an ACO using the Medicare Shared Savings Program, the Advance Payment ACO Model, or previously the Pioneer ACO Model. All three serve the purpose of providing financial incentives for facilities to provide care for those requiring Medicare. They also work to bring all of the services that Medicare beneficiaries may need under one umbrella. That will include everything from primary physicians to specialists and home care.

The Medicare Shared Savings Program (MSSP) was a section in the ACA that was created to facilitate cooperation between providers. Having patients receive all their care in one place could prevent unnecessary spending on their part, leading to a smaller coverage need. Traditionally, doctors are paid more when they perform more procedures and tests. ACOs using the savings program can prevent doctors from performing unnecessary tests just for their own paycheck by providing bonuses when they keep costs down. In some cases, doctors may be paid a flat fee for treatments, giving them incentive to only push for medically necessary procedures and tests.

The Advance Payment ACO Model provides ACOs with the savings that they earn for being an ACO in advance as an incentive for them to continue their ACO service.

The Pioneer ACO Model ended in 2016. It was a way for organizations who already participated in Medicare to move to a population-based payment plan, which lead to cost deductions for Medicare and its beneficiaries. It also started the concept of having all medical needs located in one doctor’s office, to avoid the stress and struggle of moving medical documents along with unnecessary tests.


What’s Happening Today?

In 2015, Medicare savings directly related to Accountable Care Organizations totaled $466 million. Part of former President Obama’s goal with ACA was to have at least 50% of Medicare savings coming from ACO’s by 2019, which would improve upon savings overall – it is unclear whether President Trump’s new plan will include accountable care organizations.


In mid-January of 2017, CMS announced 99 new organizations and 359,000 total participating clinicians in the 50 states and Puerto Rico. They all fall under either the Advance Payment model or the MSSP, as the Pioneer Model concluded on December 31st of last year. The Advance Payment Model and the MSSP rendered the Pioneer Model outdated, and the majority of ACOs had opted into one of the other two model options (an organization can only pick one).

The next generation ACO models provide greater benefits, including:

  • More access to home visits, skilled nursing facilities, and telehealth
  • Chance for reward payments for good service
  • Beneficiaries can confirm their ACO care
  • Better coordination with CMS

Republicans are typically not opposed to ACO’s, and they are one aspect of health care that Trump has not yet made a point to change.


You should consider ACOs for all your clients. Talk to them about what doctors they visit and how attached they are to their current physicians (if they aren’t already a part of an ACO). Help your clients achieve the best care possible, with the best coverage.

Anastasia Iliou
Anastasia Iliou
Content Marketing Manager at Senior Market Advisors
Anastasia graduated from Belmont University with a Bachelor's degree in Songwriting. When she's not writing, she's on a mission to visit all 50 states in the U.S (and to date has reached 27). Anastasia loves writing music, hiking, and her pet hedgehog, Luna. She loves animals (but not so much bugs) and spends her free time volunteering for The Elephant Sanctuary in Tennesee.