The term Accountable Care Organization (ACO) kept popping up in my reading, so I did some searching for a definition. Its proponents tout it, and the CMS is ordering its implementation.1 But what is it?

The concept of ACOs has been around since the beginning of the HMO movement, but the term is fairly new. It was coined by Elliott Fisher, MD, MPH, director of the Center for Health Policy Research at Dartmouth Medical School, who explained it thus2: “ACOs consist of providers who are jointly held accountable for achieving measured quality improvement and reductions in the rate of spending growth … these cost and quality improvements must achieve overall, per capita improvements in quality and cost, and that ACOs should have at least limited accountability for achieving these improvements …” Fisher goes on to say that ACOs can have a number of configurations, such as hospitals and physician groups.

Pretty vague, but the Patient Protection and Affordable Care Act has mandated it for Medicare patients, stating: “Not later than January 1, 2012, the Secretary [of HHS] shall establish a shared saving program that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care process for high quality and efficient service delivery.”1

I thought perhaps the CMS definition of ACO would clarify things for me: “An Accountable Care Organization, also called an ‘ACO,’ is an organization of health care providers that agrees to account for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional ‘fee-for-service’ program who are assigned to it.”3 (Assigned means the beneficiaries for whom the professionals in the ACO provide the bulk of primary care services.) Who does the assigning? The Secretary. Assignment will be invisible to the beneficiary.

Included is a list of types of organizations that can become ACOs:

  • Physician and other professionals in group practices
  • Physician and other professionals in networks
  • Partnerships/joint ventures between hospitals and physicians/professionals
  • Hospitals employing physicians/professionals
  • Other forms that the Secretary of HHS may determine appropriate

Also included are the ACO requirements, among them that it meets patient-centeredness criteria, as determined by the Secretary. As far as qualifying for shared savings, again the benchmark will be based on factors determined appropriate to the Secretary.

I’m still floundering here. Who are the other professionals mentioned above and when will the Secretary make her determinations and assignments? If the assignment is invisible, how will we know to whom we are assigned? What exactly is a “redesigned care process?” Will the “reductions in the rate of spending growth” mean “rationed care”? It seems to me that if CMS plans to play the ACO card, they need to be a little clearer. I can remember when HMOs arrived on the scene amid much fanfare and hype. They have failed to work as they were supposed to; whither ACOs? I hope it’s all figured out before I enroll in Medicare—the time is not that far away!

—Marian Benjamin
[email protected]


  1. The Patient Protection and Affordable Care Act. Sec. 3022. Medicare Shared Savings Program. Available at: Accessed December 20, 2010.
  2. The History and Definition of the Accountable Care Organization. Available at: Accessed December 20, 2010.
  3. Medicare “Accountable Care Organizations.” Preliminary Questions & Answers. Available at: (links to PDF). Accessed December 21, 2010.