• ACO Planning Guide

    Learn More About Accountable Care Organizations (ACOs)

    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 Structure: Implications and Considerations

    An ACO’s organizational structure can have implications for the way it functions and its likelihood of success. An ACO can be almost any combination of group practices, networks of practices, hospitals, hospitals employing other physicians and clinicians, hospital-physician joint ventures, or virtual groups. A key element for the success of an ACO is primary care physician leadership.

    An ACO may include or hire a management services organization (MSO) that helps with administrative non-medical functions. This may indicate that the ACO recognizes the value of professional management. You may want to ask the ACO, your colleagues, and your AAFP chapter for more information about the reputation and capabilities of the MSO.

    A hospital-led ACO may be:

    • Better capitalized, better managed, larger, and more able to realize savings across a wider range of settings
    • Too hospital oriented (i.e., spend more time and effort improving the quality and efficiency of hospital care than working to keep patients out of the hospital)
    • Trapped in the traditional view of primary care networks as referral channels funneling patients into the hospital

    An ACO that includes employed and aligned physicians may have different expectations of and for the two groups. If you are considering such an ACO, make sure you understand how the groups differ for primary care physicians and for referral specialists.

    An ACO developed by an independent practice association (IPA) may be:

    • More likely to appreciate the opportunities for quality improvement and cost reduction that primary care offers
    • Smaller and less capitalized than a hospital-led ACO
    • More challenged to develop strong, centralized leadership and the process standardization needed to maximize efficiency and quality

    As IPAs have emerged, they are not just the contracting entities they were in the past. An IPA can be viewed as a supportive organization offering structure and tools that help small and solo physician offices coordinate care. Regional differences may put an IPA at risk. Physicians in certain regions may be well-organized and prepared for a risk-bearing payment structure. However, the opposite may be true in other areas. Some organizations lack the negotiating and management skills that are necessary to coordinate large groups of physicians and patients across regions. If you are considering participation in an ACO developed by an IPA, be sure you fully understand the regional health care culture.

    An ACO developed by a clinically integrated network (CIN) may be:

    • A professionally managed organization sponsored by a hospital or IPA
    • Focused on collaboration among different health care providers
    • Able to work with the health care network and use protocols and measures to improve patient care and reduce cost

    A CIN can have many forms. Its focus may range from something as simple as coordination of efforts for a single clinical condition (e.g., diabetes) to vertical integration (i.e., the coordination of care within a hospital or other setting). Physicians selected to participate in a CIN are those who are likely to achieve efficiency objectives.

    Key Requirements for an ACO

    In a Medicare ACO, providers and suppliers of services (e.g., hospitals and others involved in patient care) work together to coordinate care of Medicare beneficiaries. The ACA requires the prospective ACO to establish a governing body with the authority to execute the ACO’s functions. The governing body must have a fiduciary duty to the ACO and must act in a manner consistent with that fiduciary duty.  Regulations require the ACO to be responsible for routine self-assessment, monitoring, and reporting of care it delivers. This information should drive continuous improvement of the care delivered to the attributed patient population. Additional eligibility requirements for a Medicare or commercial ACO may include encouragement and promotion of enabling technologies that improve care coordination for beneficiaries (e.g., electronic health records [EHRs] and other health information technology [HIT] tools). CMS expects ACOs that are ready and able to take on a high level of risk to use certified EHR technology and have robust HIT systems in place.

    Leadership for ACO Success

    Achieving results in an ACO requires perceptive, forward-thinking leaders who can effectively assess gaps in the current state, allocate resources, measure performance, showcase best practices, seek innovation, and help ACO participants keep an eye on the big picture. Successful ACOs have leaders who can articulate how each participant will contribute to patient care, quality improvement, and cost reduction. A compelling, clear vision can make it easier for people to accept necessary changes, as well as putting information and events into context. Leaders must balance optimism and realism when voicing the ACO’s goals for change. By ensuring the organization’s vision, mission, values, and performance are aligned, ACO leadership can foster a sense of purpose and responsibility among all participants.

    To be successful, an ACO must engage physicians in leadership roles to promote culture change, accountability, and adoption of innovation that supports practice transformation. To engage physicians, an ACO must outline clear roles and accountabilities for every member of the care team and build trust among physicians, administrators, and staff. Having physicians’ buy-in to the ACO’s vision, mission, and change management approach is necessary to make this undertaking achieve desired outcomes. In addition, physician leadership is required at all levels of an ACO to drive change and position the organization for success. Key skills of physician leaders include knowledge of the health care environment, professionalism, effective communication, business skills, the ability to inspire others, and expertise in delivering care defined by the needs of a specific patient population.

    Notice to Beneficiaries About ACO Participation

    Regulations for Medicare ACOs require participants to notify beneficiaries they are participating in an ACO and the ACO is eligible for additional Medicare payments if it improves quality and coordination of care while reducing health care costs. Likewise, an ACO may be financially responsible to Medicare for failing to provide coordinated, cost-effective care. Beneficiaries must also be notified their claims data may be shared with the ACO. Once a Medicare beneficiary has been notified, they may choose to receive care from an ACO physician but decline data sharing, or choose to seek care from a physician outside the ACO.

    Patients in commercial ACOs may not necessarily know they have been attributed to a particular physician. In a closed provider network, such as a point of service (POS) plan, the payer or patient selects a primary care physician (PCP) from the plan’s network to be the main health care provider. The patient is attributed to this network physician but may not be notified about the attribution. In a preferred provider organization (PPO), the plan allows open access to a variety of physicians and clinicians rather than restricting the patient to one physician, so attribution may be based on historical claims data. This can be problematic because it limits the ACO participant’s ability to coordinate care.

    Performance Metrics and Cost Reporting Requirements

    ACOs participating in the MSSP are required to completely and accurately report on the quality measures used to assess their performance. CMS annually assesses each ACO’s performance on a set of quality metrics, comparing the population of Medicare beneficiaries cared for by primary care physicians in the ACO with a benchmark(www.cms.gov) population to determine whether the ACO qualifies for shared savings.

    In both Medicare and commercial ACOs, health analytics should be a primary focus. Data allows physicians to identify patients who are likely to need the most care, take preventive steps to keep these patients healthy, and measure the organization’s progress against benchmarks. The use of an EHR is fundamental to an ACO’s success, although it is not sufficient on its own to help the ACO achieve its goals.
    When a spending benchmark has been finalized, the ACO should design reports to monitor actual costs and compare them to the benchmark. Physicians should review these reports at least quarterly. With transparent information, the care team can identify patients who are likely to need the most care. This allows physicians to take preventive steps to ensure these patients receive appropriate attention to eliminate overutilization of services.

    An ACO’s reports should accurately reflect the patients for which ACO participants are responsible. Some patients in the commercial population may not be enrolled for an entire year. For example, a patient may lose their job and become ineligible, or a patient may become eligible midyear when they start a new job. A Medicare beneficiary may not be enrolled for the entire year due to his or her death or if they choose a Medicare Advantage Plan that starts January 1 of the following year. Data from partial years are less credible, so it may be prudent to only attribute patients with 12 months of experience to the ACO for reporting purposes.

    Questions to Ask Before Committing to an ACO

    Governance and Leadership

    In order to receive and distribute payments, repay shared losses, report compliance with eligibility and program requirements, and have appropriate authority over operations, an ACO must have a legal structure and knowledgeable, effective physician leaders.

    Consider the following questions to determine your readiness to participate in an ACO:

    1) Does the organization have strong leaders who understand the shift from volume to value and the associated complexities of an ACO?

    • The organization should demonstrate its commitment to achieving the Quadruple Aim by providing the necessary resources and having an experienced leadership team, medical director, and qualified health care professional(s) to lead the quality assurance/improvement process.
    • The leadership team should agree upon the vision and mission of the ACO and should communicate these clearly to all administrators and clinicians.

    2) Are stakeholders willing to be involved in goal setting?

    • To achieve specific goals, the ACO must have appropriate resources to carry out functions that are necessary to ensure successful delivery of efficient, integrated care.
    • A clear and realistic timeline for practice transformation that is informed by stakeholder input should be established.

    3) Can ACO leadership communicate to stakeholders how each will contribute to patient care, quality improvement, and cost reduction?

    • Tools ACO participants can use to engage patients include a patient portal, same-day access, 24/7 access to the care team, urgent care availability for after hours, and personalized care plans.
    • The EHR tracks clinical data that are used to set benchmarks, such as lab and test results, medical history, medications, and procedures.
    • ACO participants should have access to and fully understand cost of care data from payers. Information about patients who receive a high percentage of their care outside of the ACO should also be available. This “leakage” can be a source of significant costs for the organization.

    4) Does the ACO understand your local health care market, including competition, prevalent diseases, the attributed population of patients, and cost drivers for your community?

    • To achieve its goals, an ACO should monitor the health status of its community to identify health problems and diseases  commonly encountered in primary care and account for significant cost and burden.
    • The ACO is held accountable for a specific number of assigned patients. Attribution of patients to physicians is a component of cost and quality performance measures.
    • ACOs can access ACO specific reports via Medicare Shared Savings portlet and commercial payer data to analyze quality reports and cost drivers (e.g., hospital readmissions, unnecessary emergency room visits, duplicative services, unnecessary care) for the attributed population.
    • Transitions in care should be well-coordinated across different settings and physicians.
    • A methodology to identify and manage high-risk patients should be in place.
    • ACOs should identify community resources that support the population.

    5) Does the organization meet requirements for its formal legal structure and governing board?

    • An ACO must be a recognized legal entity formed under applicable state, federal, or tribal law. It must be authorized to conduct business in each state in which it operates with the purpose of:
      • Receiving and distributing shared savings
      • Repaying shared losses or other monies determined to be owed to CMS
      • Establishing, reporting, and ensuring compliance with health care quality criteria, including quality performance standards
    • Legal issues on the federal level include antitrust laws, the Stark Law, the Anti-Kickback Statute, the Civil Monetary Penalties Law, and tax exemptions.
    • Legal issues on the state level include licensing, corporate practice of medicine, fraud and abuse laws, antitrust laws, provider referrals, securities laws, and false claims acts. In order to be eligible to participate in the MSSP under CMS, an ACO must establish an identifiable governing body to execute functions of the ACO.  The MSSP also requires the following of the governing body(www.cms.gov):
      • It must have responsibility for oversight and strategic direction and hold the ACO management accountable for the ACO’s activities.
      • ACO participants must have at least 75% control of the governing body.
      • The governing body must include a Medicare beneficiary served by the ACO who does not have a conflict of interest with the ACO personally or within their immediate family.
      • Members of the governing body must have a fiduciary duty to the ACO and act accordingly.
      • The governing process must be transparent.
    • The ACO must have an experienced leadership team, medical director, and qualified health care professional(s) to lead its quality assurance/improvement process. This demonstrates that the ACO has the organization, commitment, leadership, and resources necessary to achieve the Quadruple Aim.
    • Participation in the MSSP requires the ACO to accept responsibility for at least 5,000 Medicare FFS beneficiaries. An ACO is not eligible for the MSSP if it includes any participants who are participating in another Medicare initiative that involves shared savings.

    Data Management

    To be successful, an ACO must have data and analytic tools to support the delivery of improved, efficient population health care that yields financial benefits for the comprehensive network of physicians within the ACO. Having the technological capability to gather and analyze information on gaps in care, readmissions, patient conditions, and cost of care helps the ACO identify opportunities and prioritize interventions. Effectively managing data through an EHR system and a health information exchange (HIE) makes it possible to measure the quality and performance of individual providers within the organization. Understanding the cost drivers of the attributed population also helps the ACO meet its goals.

    Does the organization have a data infrastructure to support improvements in population health?

    • Integrated data systems should be in place among primary care physicians, specialists, and local hospitals within the ACO.
    • If data integration is not in place, a project plan with an implementation timeline should be launched.

    Does the organization track quality measures for the attributed population?

    • To improve the quality of care, the care team should have access to information about gaps in care at the time of a patient’s visit.
    • Quality measures should be built into the clinical workflow.
    • Clinical data such as lab results, medications, and procedures should be monitored by the care team.
    • Evidence-based care should be standardized throughout the ACO.
    • Established quality benchmarks should be set and clearly communicated to ACO participants to drive improvement.
    • The care team should be involved in evaluation of performance on quality measures so they can identify actionable data.

    Does the organization understand the cost of care for the attributed population?

    • Payer data should be available for the attributed population.
    • Data on the cost of care delivered outside the ACO should be available.
    • The organization should have a process in place to monitor the cost of care within the ACO.
    • The organization should have an action plan to identify opportunities to reduce costs through partnerships.

    Impact on Practice

    In pursuit of the Quadruple Aim, ACOs need to engage in continuous practice transformation, especially in key areas including physician engagement, staffing structure, standardization of evidenced-based care, care coordination, care management, and patient engagement.

    How does the organization engage physicians?

    The ACO should:

    • Focus on engaging all affected physicians from the beginning of their participation in the ACO so they are aware of how their patient care impacts performance metrics and cost for the organization
    • Involve primary care physicians in decision making to foster a sense of ownership and control
    • Find physician champions to advocate for evidence-based best practices, continuous quality improvement, standardization, and improved efficiency

    Does the organization support an effective staffing structure?

    • The ACO should maintain the required number of Medicare beneficiaries and have enough primary care physicians to serve this population.
    • Based on market conditions and the type of payment(s) accepted, the ACO should determine the optimal number and type of medical personnel it needs to be successful.
    • The organization may need to outsource billing, claims management, and/or care coordination, as well as contracting with IT vendors.
    • The ACO may need to form subcommittees to oversee daily business such as customer and member care services or medical management.

    Has the organization implemented evidenced-base care within the clinical workflow?

    The ACO should have a clinical workflow in place that:

    • Uses patient registries
    • Allows care team members to function at the highest level of their licensure
    • Includes point-of-care reminders based on clinical guidelines
    • Incorporates standardized orders to provide effective, streamlined care
    • Ensures that care plans are based on patient needs

    How is care coordination and management accomplished?

    The ACO should have a system in place so that providers can easily:

    How does a care manager support high-risk patients?

    Care managers play an important role in providing effective care to high-risk patients in an ACO. Depending on the ACO’s structure and patient population, the ACO itself may employ care managers to support its participants or ACO participants may employ their own care managers.

    Within an ACO, a care manager should:

    • Identify high-risk patients using a predictive risk tool or based on referral from the care team
    • Recruit and enroll identified patients in chronic care management programs (available resource: the AAFP CCM Toolkit)
    • Establish a relationship with each high-risk patient to foster trust
    • Develop a personalized care plan with realistic goals for each high-risk patient
    • Monitor high-risk patients as they move throughout the medical neighborhood
    • Integrate information from referrals from the medical neighborhood into the personalized care plan
    • Follow up with patients as appropriate

    How does the organization engage attributed patients?

    Within the ACO:

    • Patients should have access to a member of the care team 24/7.
    • Urgent care and same or next day appointments should be available.
    • A patient portal should be available.
    • A personalized care plan should be developed for each high-risk patient.
    • The teach-back method and shared decision making should be employed during each patient visit.

    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.


    Centers for Disease Control and Prevention. Community Health Status Indicators (CHSI) 2015. http://wwwn.cdc.gov/CommunityHealth/homepage.aspx?j=1. Accessed August 29, 2016.

    Institute for Healthcare Improvement. Embed evidence-based guidelines into daily clinical practice. http://www.ihi.org/resources/Pages/Changes/EmbedEvidence-BasedGuidelinesintoDailyClinicalPractice.aspx. Accessed April 15, 2016.