ACO Vertical Integration

Accountable Care Organizations (ACOs) are a voluntary program which allows physicians, hospitals, and other health care providers to join together as an integrated network to share in the responsibility for caring for a community of patients. Many benefits stem from the ability for these ACOs to coordinate care, especially chronic care, for patients. Coordinated care that is prevention oriented and focused on achieving quality outcomes while reducing waste in health care may significantly impact cost of care. While Medicare started the ACO model, other private insurers have also implemented this cost-saving tool. The ultimate goal of the ACO is to reduce costs, but not at the expense of quality. By coordinating care, ACO’s can reduce wasteful

ACO’s establish strong vertical integration of physicians, other health care providers and hospitals. The goal of an ACO is that this vertical integration will lead to greater ability to improve continuity of care and achieve quality metrics through chronic disease management. ACO’s may reduce the costs of new medical technologies by discovering lower cost, less technology-intensive ways of delivering medical care. By also reducing waste, ACO’s may actually shift the healthcare cost-curve down. Importantly for budget control, by hitting a specific minimum savings rate as outlined by CMS, ACO’s must achieve lower average per capita Medicare expenditures to share in the savings under the shared savings program. A one-sided track where ACO’s share in savings but not in the risk is the most popular track (91% of MSSP ACO’s participate in this track). For more risk-tolerant ACO’s, a two-sided model allows a greater savings incentive if the ACO hits its minimum savings rate but also puts the ACO at risk of losing money if it spends more than a CMS-determined benchmark for their