The Medicare Shared Savings Program lets healthcare providers form or join Accountable Care Organizations (ACOs) to coordinate higher-quality care to Medicare beneficiaries while helping reduce costs.

The Medicare Shared Savings Program helps healthcare workers coordinate patient care and fee-for-service expenses. Fee-for-service means that doctors and hospitals charge and get paid separately for each medical service they provide, such as a doctor’s visit, test, treatment, or day in the hospital.

Read on to learn more about how ACOs work as part of the Medicare Shared Savings Program, as well as its benefits and risks.

There are different types of ACOs. Some target specific geographic areas, such as underserved communities, while others may be geared toward people living with specific medical conditions. ACOS can support local needs and the competition among healthcare providers.

Participating in ACO is voluntary. In exchange for forming an ACO, the organization receives financial assistance from the Centers for Medicaid and Medicare (CMS) that can be used toward optimizing care.

Medicare providers who join an ACO have to sign a 5-year contract. If they manage the health of a specific group of people well over time, they can earn money through shared savings. To earn these savings, they must meet certain quality and performance standards that depend on the type of ACO.

By joining or forming an ACO, doctors and other healthcare staff can team up to improve patient care while keeping unnecessary costs down. This may involve:

  • keeping you from undergoing unnecessary tests or services
  • working to reduce mistakes in medical care
  • keeping all healthcare staff properly informed so that they can give you the best care
  • making sure all your healthcare staff have access to all your test results, treatments, and prescriptions
  • communicating with one another about your care and having coordinated access to your Electronic Health Records (EHRs),

In addition, if your primary doctor belongs to an ACO, you might get some extra benefits. For example, some ACOs let you use expanded telehealth services. You can talk with your doctor from home using a phone or computer.

In some cases, doctors in an ACO may be able to send you to a rehabilitation or skilled nursing facility without a 3-day hospital stay, which Medicare usually requires.

Whether an ACO can improve patient care while keeping costs down depends on many factors. There have been some limitations to the program’s success. Some factors that may be at play include:

  • not enough incentives for providers to join
  • limited resources or set up assistance
  • those providers who do join may be already likely to streamline care

In addition, according to the American Hospital Association, the cost of setting up and painting an ACO can reach millions in some cases. With such high costs, an ACO needs to save money yearly without losses, which isn’t easy to achieve.

What is the difference between Medicare Advantage and ACO?

ACOs are voluntary groups of healthcare providers working together to deliver coordinated, high quality care under Original Medicare (parts A and B). Medicare Advantage (Part C) is a private insurance plan that’s an alternative to Original Medicare.

What is the difference between a PPO and an ACO?

In Medicare, PPO and HMO plans are usually Part C plans. PPO plans have standardized prices that are generally more expensive than an HMO, but unlike an HMO, they allow patients to see specialists and out-of-network doctors without referrals.

ACOs, on the other hand, come from Original Medicare. An ACO is not a type of plan but a group of medical professionals focusing on improving quality care and increasing savings.

The Medicare Shared Savings Program allows healthcare providers to form or join ACOs to improve patient care while reducing costs. By participating in an ACO, medical staff can collaborate to prevent unnecessary tests, reduce errors, and ensure all staff have access to patient information like test results and prescriptions.

If your primary doctor is in an ACO, you might also gain benefits like expanded telehealth services or direct admission to rehabilitation facilities without a prior 3-day hospital stay.

However, the program’s success varies due to factors like insufficient incentives, limited resources, and the tendency for only those already inclined to streamline care to join.