Accountable Care and Accountable Care Organizations

Defining key terms:

  • Accountable Care: A person-centered care team takes responsibility for improving quality of care, care coordination and health outcomes for a defined group of individuals, to reduce care fragmentation and avoid unnecessary costs for individuals and the health system.
  • Accountable Care Organizations (ACOs): Groups of doctors, hospitals, and other health care professionals that work together to give patients high-quality, coordinated service and health care, improve health outcomes, and manage costs. ACOs may be in a specific geographic area and/or focused on patients who have a specific condition, like chronic kidney disease.
  • Value-Based Care: Designing care so that it focuses on quality, provider performance and the patient experience.

What is an Accountable Care Relationship?

In an accountable care relationship, doctors and other health care providers work with each other and their patients to manage their patients’ overall health, all while considering their patients’ personal health goals and values. These relationships can improve patients’ quality of care in the following ways: 

  • Patients are less likely to get repeat medical tests or unnecessary medical services. 
  • Doctors and other health care professionals consider a patient’s entire health history when developing a treatment plan and how it will complement other treatment plans put in place by other doctors for different health issues.  
  • Doctors and other health care professionals communicate and collaborate with each other to improve their patients’ long-term health and prevent serious health issues or hospitalization. 

How do Accountable Care Organizations Support Care Coordination?

Health care providers may agree to work together as a group, forming an Accountable Care Organization (ACO) to help coordinate their patients’ care. ACOs may consist of: 

  • primary care doctors
  • nurse practitioners
  • physician assistants
  • specialists
  • pharmacies
  • hospitals and hospital systems 
  • skilled nursing facilities and home health agencies 
  • other members of the health care team who offer and coordinate medical-related services and other supports

ACOs are designed to put patients at the center of their care and help them navigate a complex health system. Patients whose health care provider participates in an ACO may get:

  • extra help managing chronic diseases 
  • coordination between different doctors or members of their care team
  • more preventive health services to keep them healthy 
  • additional recovery support when they come home from the hospital   
  • care in more convenient ways, like care based at home or through telehealth or other virtual means

Health care providers participating in an ACO are typically required to use Certified Electronic Health Record Technology, which can give them vital access to health information when and where they need it and make it easier for providers to spot potential problems before they become more serious – like harmful prescription drug interactions if one doctor isn’t aware of what another doctor prescribed.

When ACOs provide higher quality, coordinated care that improves patient health outcomes and reduces Medicare spending, they may be eligible to share in a portion of those savings. Conversely, ACOs could pay a penalty if they provide fragmented care that increases Medicare costs. ACOs can invest any financial rewards they receive into more patient care services and supports, or they can share a portion with health providers participating in the ACO. 


What accountable care looks like for a patient

The example below illustrates how patients can benefit from accountable care.

Individualized treatment plan

John, a 69-year-old African American man with multiple chronic conditions, including diabetes and heart failure, has several visits to the emergency room. The hospital is part of an ACO where he is easily referred to a primary care doctor and specialists who can address his specific health care needs. John’s primary care provider and specialist regularly communicate and coordinate regarding his care, and his care strategy includes monthly in-home visits with a dedicated nurse practitioner and social worker. He receives a scale to monitor his weight and talks with his primary care doctor about when to go to a primary care doctor and when to use the emergency room. This type of accountable care leads to better follow up with his primary care provider, improved management of his chronic condition, and a decrease in unnecessary emergency room visits. 

Reducing health disparities 

Many ACOs are dedicated to reaching and caring for people who historically have not been able to get health care that meets their needs. Providers in an ACO may help underserved populations, for example, by making it easier to get care, such as by offering at-home or telehealth visits. Additionally, ACOs may examine social factors that may have an effect on someone’s health – like safe housing and access to nutritious food – and connect their patients with social services in their area. Because ACOs provide more coordinated care and individualized treatment plans, underserved patients are less likely to get lost in the health care system.   

What’s the relationship between an ACO and Original Medicare?

An ACO is not an insurance plan. Patients who have Original Medicare and have doctors in an ACO retain all of their rights and privileges under Original Medicare, including the freedom to see any health care provider that accepts Medicare, even if that provider is not part of an ACO. And they can opt out of Medicare sharing certain health information by calling 1-800-MEDICARE (1-800-633-4227). TTY users can call 1-877-486-2048.

How we measure accountable care

Learn how our models measure ACOs’ impact on quality of care. 

For information about how Accountable Care Organizations in Original Medicare differ from Medicare Advantage plans, view our fact sheet (PDF).

For more information about the CMS Innovation Center’s new strategy and the future of value-based care, visit our Strategic Direction webpage.

Blog: Building On CMS's Accountable Care Vision To Improve Care For Medicare Beneficiaries - Health Affairs (July 31, 2023)

  • Authors: Elizabeth Fowler, Douglas Jacobs, Purva Rawal, Meena Seshamani

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