Accountable Care Organizations

ACO Planning Guide

Get more in-depth info on ACOs with our members-only planning guide, including reasons to consider an ACO, ACO structures, and key requirements for an ACO.

Learn More »

An accountable care organization (ACO) is a group of health care providers who agree to share responsibility for the quality, cost, and coordination of care with aligned incentives for a defined population of patients. With the shift to value-based payment, it is increasingly important to understand the components of an ACO. Primary care is the foundation of a successful ACO that uses transparent performance measures to achieve the Quadruple Aim of improving population health, improving patients’ experience of care, reducing the total cost of care, and improving the work life of health care providers. In an ACO, strong primary care physician leadership of the care team is necessary to improve care coordination, enhance preventive care delivery, and reduce or eliminate duplicative or unnecessary services.

The content below serves as a planning guide to ACOs. Use the list below to jump to a topic you want to know more about.

ACO Planning Guide

Get more in-depth info on ACOs with our members-only planning guide, including reasons to consider an ACO, ACO structures, and key requirements for an ACO.

Learn More »

What is an accountable care organization, or ACO?

An ACO is a group of health care providers who agree to share responsibility for the quality, cost, and coordination of care with aligned incentives for a defined population of patients.

[ ]


Phone: (800) 274-2237

Why should I care about ACOs?

The Patient Protection and Affordable Care Act (ACA) laid the groundwork for innovative approaches to health care delivery. This gave both federal and commercial insurers impetus to improve quality and lower cost by altering the incentives in their payment methods. On April 16, 2015, Congress signed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) into law.

MACRA repeals the sustainable growth rate (SGR) and establishes a payment system that transitions away from fee-for-service (FFS) payment. The track within MACRA aligned with ACOs is the Advanced Alternative Payment Model (AAPM). Success in any aligned delivery system, including an ACO, requires you to monitor and manage quality and cost. Family physicians should work toward implementing and improving advanced primary care functions, including:

  • Increased access
  • Continuity of care
  • Coordination of care across the medical neighborhood
  • Risk-stratified care management
  • Patient and caregiver engagement
  • Planned care for chronic conditions and preventive care

Are there different types of ACOs?

ACOs can take different forms to meet local market conditions and existing levels of competition among providers. ACO programs have been piloted through the Centers for Medicare & Medicaid Services (CMS) and the Center for Medicare & Medicaid Innovation (CMMI), as well by private payers.

ACOs within CMS, such as the Medicare Shared Savings Program (MSSP), must sign a contract for three years. The minimum number of beneficiaries depends on the selected CMS ACO model.

Commercial ACOs, like their Medicare counterparts, may receive reimbursement on shared savings for a defined population over a period of time. To achieve shared savings, certain quality and performance metrics must be met. Specific contract length and risk level vary from payer to payer. The goals of a commercial ACO mirror the goals of the CMS ACOs.

What is an independent practice association (IPA)?

An IPA is a group of physician practices that have a contractual agreement to work together to provide health care for patients in a health plan network or integrated system. IPAs are important because they have existing infrastructure, management, information, technology, and organization components that can serve as the basis for a physician-sponsored ACO.

What is a clinically integrated network (CIN)?

A CIN is an arrangement (typically a separate legal organization) that is usually sponsored by an IPA or a hospital. CINs are led by physicians who want to assemble the resources needed to manage care effectively for defined patient populations. The focus of a CIN is collaboration among different health care providers and sites to ensure high-quality, coordinated, efficient services for patients.

What is a virtual group?

Virtual groups are designed to allow individual physicians or group practices to join forces during a performance period. CMS has determined that virtual groups will not be implemented during the first MACRA performance period. As this new initiative unfolds, physicians who want to join a virtual group should keep in mind that understanding both regional variances and the culture of other group members is key to achieving success.

What is attribution?

Attribution is the assignment of a patient to a specific provider for a period of time on the basis of the patient’s medical history of claims. Once a patient is assigned to a provider, his or her care can be better monitored with the assistance of performance metrics and analytics. Attribution is part of the foundation of accountability for patient populations across the continuum of care.

Are there different types of attribution?

Retrospective attribution, or “performance year attribution,” assigns a patient to an ACO based on the provider(s) from which the patient received his or her care during the performance year. This ensures that only patients who met the inclusion criteria in the preceding year are counted toward the ACO’s attributed lives.

Prospective attribution uses historical claims data to determine patient attribution. This methodology allows the ACO to know up front which patients they will be held accountable for, and it empowers the ACO to track expenditures and measure care progress for specific patients throughout the year.

Should I be aware of any concerns about retrospective or prospective attribution?

Retrospective attribution does not give providers an active list of their attributed patients up front. It may be challenging to engage in effective population health management if you do not know which patients you will be accountable for in the delivery, management, and/or coordination of care.

Prospective attribution may include patients who do not meet the inclusion criteria during the current year and receive a high percentage of their care outside of the ACO. The ACO has relatively little control over this “leakage,” which can be a source of significant costs for the ACO.

What is shared savings?

Shared savings is designed to reward a group of providers for working together to deliver care that meets performance standards for quality of care and lowers health care costs. The savings is calculated and distributed to various parties as specified in the ACO contract.

What is a benchmark?

A benchmark is a specific level of cost savings or quality a provider must meet to qualify for a payment or avoid a payment adjustment. In many shared savings payment arrangements, a provider qualifies for shared savings if spending for his or her attributed patients is below a benchmark spending level and quality measures are above benchmark quality levels.

What should I know about risk-sharing options?

You will be more likely to achieve success in an ACO if you have a clear understanding of payment arrangements that best align with your practice. A one-sided shared savings arrangement allows provider groups to share a percentage of savings when they have met applicable requirements. In the one-sided model, providers do not assume any downside risk. This approach allows a provider group that has less experience in risk models to gain experience with population health management.

In a two-sided shared savings arrangement, providers take on upside risk and downside risk, sharing in both savings and losses. In the two-sided model, the downside risk gives providers an incentive to reduce costs. Providers in this type of payment arrangement may be eligible for a higher sharing rate with a higher performance payment limit than in the one-sided model.

What are my next steps?

Learn all you can about an ACO before you commit to it. Talk to colleagues. Consult your AAFP chapter, your state’s medical society, and a good health care attorney.