Summary: What is an Accountable Care Organization? What is the basis of an ACO? What are the requirements of an ACO? What types of ACO exist?

What is an ACO?          

According to the AAFP, Accountable Care Organizations are defined as “a group of health care providers who agree to take on a shared responsibility for the care of a defined population of patients while assuring active management of both the quality and cost of that care”.

What is the basis of an ACO?

ACOs are based upon the concept of patient centered care. Patient centered care places the patient at the nucleus or center of his/her care and delegates the responsibility of coordinating care among specialists, laboratory, radiology etc. with the primary care physician. Patient centered care is often referred to as either patient centered medical home (PCMH) or patient centered health care home (PCHCH). Both terms are synonymous and a matter of personal preference from an organization’s perspective.  Patient-centered care strives to attain both quality and efficiency as it relates to an individual’s care.  The basis for patient-centered care and ACO is founded in the Affordable Care Act which became effective in 2010. The ACO provisions became effective in 2011.

What is the difference between ACO and managed care?

According to the AAFP, “the ACO model is designed to achieve those savings through improvements to care quality and population health care as opposed to restricting utilization of health care services.”

What are the requirements to become an ACO?

  • Formal legal structure designed to both receive and distribute shared savings
  • Have a sufficient number of primary care physicians – minimum of 5,000 and enough to service the number of beneficiaries.
  • Sign a contract to participate in the ACO  for at least 3 years
  • Sufficient information regarding participating ACOs
  • A leadership structure comprised of both clinical and administrative staff
  • Defined processes to promote evidence-based medicine, to report on quality data, and to coordinate care
  • Meet the criteria of patient-centered care

What types of organizations can form ACOs?

  • ACO professionals (such as physicians and hospitals) in group practice arrangements
  • Networks of individual practices of ACO professionals
  • Partnerships or joint venture arrangements between hospitals and ACO professionals
  • Hospitals employing ACO professionals
  • Other Medicare providers and suppliers as determined by the Secretary

Each ACO, at a minimum, must have providers, suppliers, and Medicare beneficiaries on the governing board.

What type of ACO models are in existence?

  • Integrated Delivery Systems – common ownership of hospitals, physician practices and perhaps insurance companies with well aligned financial incentives, electronic medical records, team-based care and resources to support cost-effective care
  • Multispecialty Group Practice – have strong affiliations with hospitals. They usually don’t own the health plan, but have contracts with multiple health plans
  • Physician-Hospital Organizations – subset of the hospital’s medical staff – some function like multispecialty group practices
  • Independent Practice Associations – individual physician practices that come together to contract with health plans
  • Virtual Physician Organizations – generally physicians in rural areas

Each type has a specific risk level associated with the ACO.

After becoming an ACO, then what?NCQA Accreditation

The natural progression in the ACO process is to become accredited with a national healthcare accreditation organization such as NCQA. NCQA accreditation provides a competitive advantage over non-accredited organizations. NCQA just announced in December 2012 the first organization to achieve accreditation for ACOs, Kelsey-Seybold Clinic, out of Houston Texas.  As of today, there are 6 organizations who have achieved ACO accreditation:

  Organization Name Accreditation Status Expiration Date
Billings Clinic Level 1 12/6/2014
Crystal Run Healthcare Level 2 11/30/2015
Essentia Health Level 2 2/5/2016
HealthPartners Level 2 12/12/2015
Kelsey-Seybold Clinic Level 2 11/2/2015
The Children’s Hospital of Philadelphia Level 1 1/16/2015

NCQA offers 3 levels of accreditation:

Level 1: Organizations beginning the transformation and providing the basic infrastructure and some of the capabilities to meet the triple aim of better patient experience, better health and lower per capita cost.   The length of status is 2 years.

Level 2: Organizations demonstrating well-established capabilities outlined in the standards to meet the triple aim of better patient experience, better health and lower per capita cost. The length of status is 3 years.

Level 3: Organizations demonstrating strong performance or significant improvement in performance measures across the triple aim of better patient experience, better health and lower per capita cost. The length of status in 3 years.

If you are in need of an NCQA consultant, please review our BHM Healthcare Solutions website – and contact us: 1-888-831-1171 or