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Improving Health Care Delivery through ACOs

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By Meg O’Donnell

Paying attention to health care reform recently? If so, you’ll have heard the acronym “ACO” bandied about . . . . maybe even at cocktail parties, since rumor has it that saying “ACO” makes you sound, well, knowledgeable!

But as with so much in health care, what “accountable care” means, and how it gets translated into reality by an “accountable care organization,” is not so easy to define.

Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients.

The goal of coordinated care is to ensure that patients, especially the chronically ill, get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. When an ACO succeeds both in both delivering high-quality care and spending health care dollars more wisely, it will share in the savings it achieves for Medicare.

The Idea Behind an ACO
The concept of an ACO was first put forward by Elliot Fisher and his colleagues at The Dartmouth Institute in a paper they wrote in 2007. At its most basic, the idea of an ACO capitalizes on the fact that data demonstrate that most of us get the bulk of our health care through providers in one health service area, located close to where we live. Dr. Fisher and his colleagues asked the question whether those providers, then, could somehow join together to be “accountable” for the care people in their service area get.

ACOs and the Affordable Care Act
That idea – holding one set of providers financially accountable for the health of a population – is what Medicare is now promoting under the Affordable Care Act (ACA). The ACA authorized Medicare to approve provider-led ACOs, who would be held “accountable” for the care given to all of the Medicare patients the ACO’s network participants care for over a three-year period. If Medicare’s costs for those patients is less than what would otherwise have been expected, then – with some conditions – those network participants get to share in the savings.

Providing High-Quality Care
It’s important to remember that ACOs are about a lot more than trying to save money for Medicare.

In fact, they’re one of the primary tools for reshaping both the delivery system and the payment system – moving us away from fee-for-service medicine that pays every provider for every service they do, to a system that consistently rewards hospitals, doctors and others for providing high-quality care.

To learn more, watch Medicare’s video about ACOs.

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Meg O’Donnell is the director of Government Relations at the University of Vermont Medical Center and an instructor for UVM’s Health Care Leadership Certificate Program.