For Providers

What is an ACO?

Accountable Care Organizations (ACOs) are organizations of health care providers that agree to be accountable for the quality, cost, and overall care of beneficiaries enrolled in the traditional fee-for-service programs for particular, contracted health plans.


ACOs seek to tie provider reimbursements to quality metrics and reductions in the total cost of care. ACOs are accountable to patients and contracted third-party payers for the quality, appropriateness and efficiency of care.

The three core principles for all ACOs include:

  1. Provider-led organizations with a strong base of primary care that are collectively accountable for quality and total per capita costs across the full continuum of care for a population of patients.
  2. Payments linked to quality improvements that also reduce overall costs.
  3. Reliable and progressively more sophisticated performance measurement to support improvement and provide confidence that cost savings are achieved through improvements in care.

By increasing care coordination, ACOs can help reduce unnecessary care and improve health outcomes, leading to a decrease in utilization of costly acute care services.

On March 31, 2011, the US Department of Health and Human Services proposed the initial set of guidelines for the establishment of ACOs under the Medicare Shared Savings Program (Section 3022 of the Patient Protection and Affordable Care Act). These guidelines outline the necessary steps that voluntary groups of physicians, hospitals, and other health care providers must complete in order to participate in ACOs.