ACOs

Accountable Care Organizations (ACO)

What is an ACO?

ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high-quality care to their Medicare patients who are assigned by CMS. ACO models dictate how care coordination is provided and reimbursement received. The goal of coordinated care is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. Within the Medicare program, when an ACO succeeds in delivering high-quality care and spending health care dollars more wisely, the ACO will share in the savings it achieves. There are other payer ACO models as well, but this page will focus on Medicare ACOs.

Where can I learn more about ACOs?

CMS offers different learning opportunities for providers and organizations interested in learning more about ACOs. To learn about the latest opportunities, visit CMS Innovation Center and Medicare Shared Savings Program.

What is the CMS ACO Reach Model (formerly the Global and Professional Direct Contracting Model)?

The goals of the redesigned ACO REACH Model are to improve quality of care and care coordination for patients in Traditional Medicare, especially for patients in underserved communities. The ACO REACH Model provides tools and resources to empower doctors and other health care providers to achieve these goals. This approach affords patients greater individualized attention to their specific health care needs while preserving choice of providers and all other services and flexibilities in Traditional Medicare. Patients in a REACH ACO get help navigating the health system and managing their conditions. They may have greater access to enhanced benefits, such as telehealth visits, home care after leaving the hospital, and help with co-pays. The ACO Realizing Equity, Access, and Community Health (REACH) Model encourages health care providers — including primary and specialty care doctors, hospitals, and others — to come together to form an Accountable Care Organization, or ACO. The model uses an innovative payment approach to better support care delivery and coordination for people in underserved communities. The first Performance Year of the redesigned model began on January 1, 2023 and will run for four Performance Years: Performance Year 2023 (PY2023) through PY2026.

There are 3 types of participants:

Standard ACOs: ACOs comprised of organizations that generally have experience serving Traditional Medicare patients, including Medicare-only and also dually eligible beneficiaries, who are aligned to an ACO through voluntary alignment or claims-based alignment. These organizations may have previously participated in another Center for Medicare and Medicaid Innovation (Innovation Center) shared savings model (e.g., Next Generation ACO Model and Pioneer ACO Model) and/or the Shared Savings Program. Alternatively, new organizations, composed of existing Original Medicare providers and suppliers, may be created to form a Standard ACO. In either case, clinicians participating within these organizations would have substantial experience serving Original Medicare beneficiaries.

New Entrant ACOs: ACOs comprised of organizations that have not traditionally provided services to an Original Medicare population and who may rely primarily on voluntary alignment, at least in the first few performance years of model participation. Claims-based alignment will also be utilized.

High Needs Population ACOs: ACOs that serve Original Medicare patients with complex needs, including dually eligible beneficiaries, who are aligned to an ACO through voluntary alignment or claims-based alignment.
These participants are expected to use a model of care designed to serve individuals with complex needs, such as the one employed by the Programs of All-Inclusive Care for the Elderly (PACE), to coordinate care for their aligned beneficiaries.

There are 2 participation options:

Professional: A lower risk-sharing arrangement—50% savings/losses—with one payment option for participants: Primary Care Capitation Payment, a risk-adjusted monthly payment for primary care services provided by the ACO’s participating providers.

Global: A higher risk sharing arrangement—100% savings/losses—with two payment options: Primary Care Capitation Payment (described above) or Total Care Capitation Payment, a risk-adjusted monthly payment for all covered services, including specialty care, provided by the ACO’s participating providers.

What is the Medicare Shared Savings Program (MSSP)?

The MSSP allows ACOs to share savings and risk with the Medicare Program and will reward ACOs that lower their growth in health care costs while meeting performance standards on quality of care and putting patients first. ACOs may participate in the Shared Savings Program for agreement periods of at least five years, under one of two participation tracks - the BASIC track (which includes a glide path for eligible ACOs), or the ENHANCED track, which offers the highest level of risk and potential reward. The different tracks correspond to the potential level of risk and shared savings an ACO may receive. As this potential for sharing in savings due to increased efficiencies and improved outcomes increases (“shared savings”), MSSP tracks also require that ACOs maintain a certain level of financial responsibility for when costs increase (“shared losses”) beyond a determined cost benchmark. More information can be found in the Physicians Advocacy Institute’s presentation. Medicare will continue to pay individual ACO providers and suppliers for covered items and services as it currently does under the Medicare Fee-For-Service payment systems. However, as discussed above, ACOs will be eligible to receive shared savings, or be responsible for shared losses, based on their performance compared to their established benchmarks. View the 2024 Shared Savings Program Fast Facts resource for performance data on the program.

In order for participating providers to form an ACO, they must serve a plurality of evaluation and management (E&M) services to at least 5,000 Medicare fee-for-service (FFS) beneficiaries and participate in the program for at least five years. A provider participating in MSSP is defined as “…an entity identified by a Medicare-enrolled billing TIN through which one or more ACO providers/suppliers bill Medicare, that alone or together with one or more other ACO participants compose an ACO, and that is included on the list of ACO participants.” More information can be found in the PY2024 Participant and Preferred Provider Management Guide.