• Accountable Care Organizations

    With the shift to value-based payment, it is increasingly important to understand the components of an accountable care organization (ACO). These FAQs can help. Before you commit to working with an ACO, learn all you can about an ACO. Talk to colleagues and consult your AAFP chapter, your state’s medical society, and a good health care attorney.

    Frequently Asked Questions about ACOs

    What is an accountable care organization, or ACO?

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

    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    MACRA repealed the sustainable growth rate (SGR) and established a payment system that transitions away from fee-for-service (FFS) payment.The tracks within MACRA aligned with ACOs are Advanced Alternative Payment Model (AAPM) and  Merit-based Incentive Payment System Alternative Payment Model (MIPS APMs). 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 as private payers.

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

    Commercial ACOs, like their Medicare counterparts, may receive payment 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 attribution?

    Attribution is the assignment of a patient to a specific physician or clinician for a period of time based on  the patient’s claims history. Once a patient is assigned to a physician or clinician, their care can be better monitored with the assistance of performance metrics and analytics. Understanding attribution is part of the foundation of accountability for patient populations across the continuum of care.


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    Are there different types of attribution?

    Retrospective attribution, or “performance year attribution,” assigns a patient to an ACO based on the physician(s) or clinician(s) from whom 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 upfront 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.

    Medicare offers preliminary prospective with retrospective reconciliation provides the ACO with a list of beneficiaries that are prospectively assigned via claims and prospectively voluntarily aligned prior to the start of the performance year. CMS runs updated assignment lists each quarter. 

    Medicare beneficiaries may also voluntarily align with an ACO. In this method, beneficiaries select their primary physician or clinician at the ACO through MyMedicare.gov. Voluntary alignment takes precedence over all other assignment methods.

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

    Retrospective attribution does not give physicians and clinicians an active list of their attributed patients upfront. 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 are shared savings?

    Shared savings models are designed to reward a group of physicians and clinicians for working together to deliver care that meets performance standards for quality of care and lowers health care costs. The savings are 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 an ACO must meet to qualify for shared savings or avoid incurring shared losses. In many shared savings payment arrangements, an ACO qualifies for shared savings if spending for attributed patients is below a benchmark spending level and quality measure performances is 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 ACOs to share a percentage of savings when it meets applicable requirements. In the one-sided model, an ACO does not assume any downside risk. This approach allows an ACO with less experience in risk models to gain experience with population health management.

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