What Are Accountable Care Organizations and How Could They Improve Health Care Quality?

Under the Accountable Care Organization (ACO) concept, health care providers are organized into teams that together are responsible for the health of a given population and the cost of providing its care.

The theory behind ACOs is that well-coordinated care can improve overall health and health care quality while decreasing duplication of services, reducing risks of errors and complications, and lowering costs.

ACOs can work with public or private insurers, and some have already formed in the private sector. But the greatest attention has arisen from Medicare’s attempt to bend the cost curve by fostering ACOs under the Medicare Shared Savings Program created by the 2010 Affordable Care Act.

ACOs that meet certain quality performance requirements would share in any money they save Medicare, called shared savings. In some cases, ACOs would also face financial penalties if they do not meet their savings goals.

This Health Policy Snapshot, published online in December 2011, examines how ACOs can be a leading model to transform health care delivery.

Read more from RWJF's Health Policy Snapshot series.

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ACOs designed to encourage providers to better coordinate services for patients and reduce costs