How ACOs Work

​Accountable care organizations (ACOs) are aggregations of multiple providers committed to improving the quality and cost-effectiveness of a patient population.  ACOs share the benefits of improved care with payers and their member practices.


Medicare uses a fairly complicated method to determine if and how much each ACO has impacted the cost of care for patients assigned to it. Each ACO is assigned a “benchmark price” for its patients. That price reflects a risk-adjusted average cost per patient assigned to ACO practices during a baseline period (2019-2021 in our case).  That cost is trended forward to each “performance year” during the ACO’s contract.  If the actual costs for the ACO’s patients are sufficiently below the benchmark, the ACO receives a portion of the difference in savings.

The amount that an ACO receives is adjusted by its scores on a set of quality measures.  Many of those measures are based on a patient experience of care survey. Some are based on claims data, such as hospital readmission rate, while others are based on registry data.

Patient Assignment (Attribution)

But which patients is the ACO responsible for?  Patients are assigned to the ACO when ACO providers bill for a plurality of primary care visit costs.  (There needs to also be at least one primary care physician claim from an ACO member physician for the patient to be assigned to the ACO.)

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