Summary: Accountable Care Organization are becoming more prevalent. Is Accountable Care Organization conversion in your future? Do you have the facts you need to make the right choice?

Preparing for an Accountable Care Organization conversionWhat is an Accountable Care Organization?

Accountable Care Organizations (ACOs) provide incentive to official groups of providers and suppliers of services who work together to coordinate care. These groups may include doctor’s offices, hospitals, and other healthcare providers. The goals of an ACO are sometimes referred to as the Triple Aim: better health, better care, and lower costs.

Medical Homes – the Building Blocks of ACOs

ACOs build off of the concept of medical homes. A medical home is a patient centered healthcare delivery system which places the patient at the center of his care and the decisions surrounding that care. Additionally, the primary care physician is charged with coordinating care among specialists, laboratories, diagnostic imaging, and other healthcare providers. The goals of the Medical Home, according to the Academy of Family Physicians, the Academy of Pediatrics, the American College of Physicians, and the American Osteopathic Association are to provide: better access, coordination of care, prevention, quality, and safety within the primary care practice, and to create a strong partnership between the patient and the primary care physician.  Medical homes may be eligible for additional per member per month incentives for improving primary care services.

An ACO is sometimes referred to as a medical neighborhood, consisting of several medical homes. ACOs take Medical Homes a step further Preparing for an Accountable Care Organization conversionadding an ACCOUNTABILITY factor for both costs and quality of care while maintaining the patient-centered focus. ACOs span across the continuum of care, including specialists, hospitals, etc. One of the benefits of an ACO over a Medical Home is access to a larger budget to more effectively manage care for a larger population.  The increased budget  can provide better overall cost management, less variation within the population, and the ability to track and trend for quality.

History of ACOs

The Affordable Care Act was enacted in 2010 and one of the provisions was to create a Shared Savings Program. This program is intended to encourage providers of services and suppliers to create Accountable Care Organizations which agree to a new standard of ACCOUNTABILITY for improving the healthcare experience, improving the health, and reducing costs (the Triple Aim as indicated above). Receiving the right care at the right time while eliminating duplication and preventing medical errors is achieved through coordinated. From a Medicare patient’s perspective, the benefits of an ACO are to receive high quality care that eliminates waste and reduces excessive costs. So basically, the ACO is a win-win for both providers and patients.

On October 20, 2011, the Centers for Medicare & Medicaid Services (CMS) finalized new rules under the Affordable Care Act (ACA) to help doctors, hospitals and other health care providers better coordinate care for Medicare patients through ACOs.

Who is eligible to form an ACO?

According to the Affordable Care Act, the following may unite to form an ACO:

  • ACO professionals in group practices
  • Networks of individual practices of ACO professionals
  • Partnerships or joint venture arrangements between hospitals and ACO
  • Hospitals employing ACO professionals
  • Other groups as approved by the Secretary

Preparing for an Accountable Care Organization conversionProcess to become an ACO

In order to become deemed as an ACO, there are several items which must be accomplished:

  • Application to CMS
  • Must serve at least 5,000 Medicare-Fee-For-Service patients
  • Agree to participate for 3 years
  • Establish a governing body
  • Develop processes to promote evidence-based medicine
  • Promote patient engagement
  • Internally report on quality and cost
  • Coordinate care
  • Maintain a patient-centered focus

Required notification to beneficiaries

Upon becoming an ACO, the ACO is required furnish certain information to their beneficiaries. The beneficiaries must be made aware of the provider’s participation in the ACO, the eligibility of the provider to receive additional Medicare payments for improving quality of care and reducing costs, as well as the potential for the beneficiary’s claims data to be shared with the ACO. The beneficiary has the ability to deny access of claims information by the ACO as well.

Characteristics of an ACO

Preparing for an Accountable Care Organization ConversionCertain characteristics indicate future success of an ACO. Some of these characteristics include:

  • Ability to manage costs and quality of care, given the variety of payment systems
  • Infrastructure to support performance measures, improve quality, and report on performance
  • Commitment to achieve quality and cost efficiencies
  • Physician management structure which supports the goals of increased quality and reduced costs
  • Culture that is focused upon continuous quality improvement
  • Health information technology to share information across the continuum of care

Shared Savings

Under an ACO, they are eligible for “shared savings”.  The savings is ACO specific in which CMS determines benchmarks of performance which are updated each year. In addition to savings benchmarks, some ACOs are held accountable for their losses and required to pay Medicare back should the losses arise. Shared savings are currently in addition to the traditional Fee-For-Service payments.

Barriers to becoming an ACO

With all of the benefits afforded an ACO, why aren’t more of them formed? With most programs that reap financial benefits, there are costs and/or barriers to consider.Preparing for an Accountable Care Organization Conversion

Multispecialty Group Formation

Size of the Patient Population




Lack of consistent measures

Market based


Overcoming the barriers to an Accountable Care Organization conversion can be a complex task, requiring expertise in many areas.  BHM Healthcare Solutions has as one of its many specialties, Accountable Care Organization Conversion. We can provide a roadmap and help you every step of the way to achieving ACO status.

For a complimentary consultation to find out how we can best assist you in your ACO conversion, please contact us 1-888-831-1171 or Start sharing in the Medicare savings you deserve!

Would you like more information on the Affordable Care Act? Click below for a complimentary white paper!

Preparing for an Accountable Care Organization Conversion