July 10, 2020/Digestive/Q&A

Frequently Asked Questions About Accountable Care Organizations

What is an accountable care organization and how does it work?


By Maged Rizk, MD, MBA


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In a time of seemingly constant change in healthcare, many different organizations are proposing potential alternate care delivery and payment models. Among these newer models is the Accountable Care Organization (ACO). This Q&A is the first of a series discussing care transformation, particularly as it relates to the ACO model. In this article, I define ACOs and describe how the model works.

Accountable care organizations

Q: What is an ACO?

A: An ACO is a partnership between a group of providers and/or healthcare systems to provide high-value care to Medicare patients. ACOs can vary in size and affiliation. They can be composed of employed or independent physicians. They can be physician managed, or affiliated with a healthcare system or academic institution.

Q: How does a patient become a member of an ACO?

A: Medicare patients are attributed by the Center of Medicare and Medicaid Services (CMS) to an ACO based on definitions set forth by CMS. Most of these criteria revolve around whom the patient’s primary care provider is and whether that provider is participating with an ACO. On occasion, a patient may not have a primary care provider but obtains most of his/her care by a specialist who also participates in an ACO. In those cases, a patient may be considered part of that specialist’s ACO. Based on the prior year’s care, the ACO receives a list of patients who are attributed to their ACO.

Q: Do patients know they are part of an ACO?

A: Every year, Medicare patients are sent a letter that notifies them of their ACO assignment. Patients then have the option to opt out if desired.

High-value care

Q: What do ACOs do?

A: The agreement between ACOs and Medicare is that, in exchange for data around care that a patient is provided, the ACO commits to deliver high-value care. High-value care is defined broadly as care that: (1) improves patient experience; (2) achieves quality metrics that ensure a patient is receiving appropriate care; (3) reduces unnecessary or high-cost care; (4) coordinates care as much as possible among different providers.

Q: What are the levers that ACOs use to provide high-value care?

A: One way ACOs can provide high-value care is by reducing unnecessary hospitalizations and emergency room visits. This can apply to ambulatory care sensitive conditions, such as congestive heart failure, chronic obstructive pulmonary disease and chronic kidney disease. The term ambulatory care sensitive conditions was defined in a 1993 Health Affairs article as those conditions “for which timely and effective outpatient care can help to reduce the risks of hospitalization by either preventing the onset of an illness or condition, controlling an acute episodic illness or condition, or managing a chronic disease or condition.”

To accomplish this, an ACO can (1) improve access to outpatient care; (2) reduce the overall cost of care provided across the group of patients for which the ACO is responsible; and (3) reduce the cost of administered medications (Part B pharmacy). These changes require that providers standardize care pathways for different disease conditions using a data-driven approach, while being mindful of the value that is provided to patients. Additionally, ensuring that patients receive post-hospitalization care as close to the home setting as possible is another way to improve the quality of care.


Q: Does Cleveland Clinic participate in an ACO?

A: Yes, Cleveland Clinic employed and affiliated physicians participate in the Cleveland Clinic Medicare ACO. It is a large ACO that cares for 90,000 patients in the Northeast Ohio region.

About the author

Maged Rizk, MD, MBA, is Associate Medical Director of Cleveland Clinic’s Accountable Care Organization.


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