Medicare Accountable Care Organizations

In 2011, The U.S. Department of Health and Human Services (HHS) proposed new rules to assist doctors, hospitals, and other healthcare providers better coordinate care for Medicare patients through Accountable Care Organizations (ACOs). 

Accountable Care Organizations refer to a group of providers and suppliers of services (e.g., hospitals, physicians, and others involved in patient care) that work together to manage both the quality and cost of patient care. The Medicare Shared Savings Program will reward ACOs that lower healthcare costs while meeting performance standards on quality of care and prioritizing patient health. 

Organizations have the option to participate in the shared savings program through one of two ways. In the first, the ACO shares in savings achieved by the shared savings model, but is accountable for any losses as well. In the second model, the ACO shares in the savings but is not responsible for any losses for the first two years of the program.