Melody Song
HCA 450: Special Topics
April 16, 2015
ACO and Bundled Payments

Accountable care organizations (ACOs) were proposed in the Affordable Care
Act as a measure to slow rising healthcare costs and improve quality in the traditional healthcare organization. ACOs seek to tie provider pay with quality outcomes and reduce total cost of care by increasing integration and reducing fragmentation. Within an ACO, a group of coordinated health care providers deliver and care across the full continuum to a group or population of patients.
The ACA introduces and encourages use of ACOs by establishing the Medicare Shared Savings Program (SSP) for Medicare Reimbursement through the Centers for Medicare and Medicaid Services (CMS). Under the SSP, providers that participate in an ACO continue to receive traditional Medicare fee-for-service payments but may be eligible to receive a shared savings payment if it meets specified quality and savings requirements. Therefore, “if an ACO succeeds in both delivering high-quality care and reducing the cost of that care to a level below what would otherwise have been expected, it will share in the Medicare savings it achieves.” ACOs are however, held to high standards and must meet several quality-performance standards to ensure their patients meet preventative and chronic health needs. The Medicare SSP focuses on achieving the Triple-Aim of better care experience for individuals, better health for populations, and lower per capita costs. While the SSP is a voluntary program, the financial opportunity will vary according the ACO’s risk tolerance and which of two models they choose. The first model carries lower risk but a smaller return, whereas the second model accepts higher risks for a higher shared savings.
The potential impact of ACOs on quality, access, and cost are high because they serve as the foundations of the