The Accountable Care Organization was introduced as part of the Affordable Health Care Act the Accountable Care Organization (ACO) as a means of saving the original Medicare money, as well as providing more coordinated care among the different physicians and health care providers that evaluate or perform services for a Medicare beneficiary. The Accountable Care Organization will help prevent doctors from ordering duplicate testing or evaluations for Medicare beneficiaries. While there has not been much discussion regarding the Accountable Care Organization in the news, it is expected to saving the original Medicare program a significant amount of money over the next few years.

What is an Accountable Care Organization and how does it work?

An Accountable Care Organization is a new health care delivery model envisioned by the Affordable Care Act in which a group of doctors, hospitals and other health care providers work together to coordinate care for people enrolled in original Medicare. Within an Accountable Care Organization doctors and hospitals would have to meet specific quality benchmarks, focusing on prevention and carefully managing patients with chronic diseases. In other words, providers would get paid more for keeping their patients healthy and out of the hospital.

How will an Accountable Care Organization save the original Medicare program money?

Many original Medicare beneficiaries have several chronic conditions and see several different doctors. As often as not, the doctors do not work together, and the Medicare beneficiary receives redundant or conflicting care. Under the new model, an Accountable Care Organization will be responsible for providing all health care services for a Medicare beneficiary. Through better coordination and communication, Accountable Care Organizations are expected to provide better care more efficiently and, therefore, with lower costs. In fact, Accountable Care Organizations are expected to save the original Medicare program $960 million over three years.

How is an Accountable Care Organization paid for its services?

As with original Medicare, an Accountable Care Organization will still be paid on a fee-for-service basis. However, the members of the Accountable Care Organization will also be able to earn more if they keep costs down while meeting quality targets. If the Accountable Care Organization saves money, the savings will be shared between the Accountable Care Organization and the original Medicare program.

Is an Accountable Care Organization the same as a Health Maintenance Organization?

While an Accountable Care Organization sounds very similar to a Health Maintenance Organization (also known as “HMO”), there are some critical differences. Specifically, a Medicare beneficiary whose physicians or other health care providers are a part of an Accountable Care Organization are not required to “stay in the network”. However, although physicians will likely want to refer Medicare beneficiaries to hospitals and specialists within a specific Accountable Care Organization, Medicare beneficiaries would still be free to see doctors of their choice outside the network without paying more.

Steve Lieberman, Deputy Director for Policy and Analysis at the National Governors Association, explains that Accountable Care Organization aim to replicate “the performance of an HMO” in holding down the cost of care while avoiding “the structural features that give the HMO control over [patient] referral patterns,” which limited patient options and created a consumer backlash in the 1990s. That will not happen in an Accountable Care Organization because the Medicare beneficiary is not restricted to a network of physicians.

Medicare Pathways wants you to stay informed regarding the Affordable Healthcare Act and the changes that affect the original Medicare program. Medicare Pathways specializes in Medicare insurance and knows the concerns many people have with change.  A Medicare Pathways Benefit Advisor will  assist you in purchase the most appropriate and most affordable Medicare insurance plan, such as a Medicare Supplement or Medicare Advantage plan. You can speak with a Benefit Advisor by calling 1-866-466-9118.

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