The organization is accountable to patients and third-party payers for the quality, appropriateness and efficiency of the health care provided.
[1] The term accountable care organization was first used by Elliott Fisher in 2006 during a discussion of the Medicare Payment Advisory Commission.
[12] On July 7, 2013, the Centers for Medicare and Medicaid Services announced the results of the pioneer ACO demonstration.
[15] The ACO's model of fostering clinical excellence while simultaneously controlling costs depends on its ability to "incentivize hospitals, physicians, post-acute care facilities, and other providers involved to form linkages and facilitate coordination of care delivery".
[17] The US Department of Health and Human Services (DHHS) proposed the initial set of guidelines for the establishment of ACOs under the Medicare Shared Savings Program (PPACA Section 3201) on March 31, 2011.
These guidelines stipulate the necessary steps that physician, hospital and other health care provider groups must complete to become an ACO.
[21] The provider network is required to include sufficient primary care physicians to serve its enrollees.
Prior to applying to MSSP, an ACO must establish appropriate legal and governance structures, cooperative clinical and administrative systems and a shared savings distribution method.
), physician assistants, nurse practitioners, clinical nurse specialists) in group practice arrangements, networks of individual practices, partnerships or joint venture arrangements between hospitals and ACO professionals, hospitals employing ACO professionals, or other Medicare providers and suppliers as determined by the Secretary of Health and Human Services.
[17] ACO's incentive payments are determined by comparing the organization's annual costs relative to CMS-established benchmarks.
CMS updates benchmarks by the projected absolute amount of growth in national per capita expenditures as well as by beneficiary characteristics.
The final regulations allowed for broader ACO governance structures, reduced the number of required quality measures and created more opportunities for savings while delaying risk bearing.
Under the one-sided model, providers have the opportunity to engage in ACOs and any savings above 2% without any financial risk throughout the three years.
In addition, the quality measures required were reduced from 65 to 33, decreasing the monitoring that providers claimed was overwhelming.
[24][25] The final regulations required ACOs to:[26] CMS introduced the one-sided and two-sided payment model.
[28]: 19621 However, initial feedback raised concerns regarding ACO's financial risk and possible cost savings.
Under the one-sided model, providers no longer assumed any financial risk throughout the three years and continued to share in cost savings above 2%.
Payers may play several roles in helping ACOs achieve higher quality care and lower expenditures.
[34] A range of ACO pilots took place uniting commercial insurers and state Medicaid programs (New Jersey, Vermont, Colorado, etc.)
These pilot programs' results were mixed: some organizations' implementation yielded financial benefits while others experienced trouble balancing costs with savings.
[38] ACOs have the potential to improve quality of care while reducing healthcare spending in a nation with high health expenditures.
In addition, the American Hospital Association estimated that ACO formation would incur high startup costs and large annual expenses.
[citation needed] ACOs risk violating antitrust laws if they are perceived to drive up costs through reducing competition while providing lower quality of care.
Physician groups need a robust Electronic Health Record (EHR) system that is capable of advanced reporting, disease registries and patient population care-management.
Organizations that have achieved their Patient Centered Medical Home (PCMH) accreditation have already mastered these functions and are thus further along the road to meeting ACO metrics.