Accountable Care Organizations (ACOs) are networks of physicians, hospitals, and other health care providers who come together to deliver coordinated, high-quality care and share responsibility for the quality, cost, and overall care for a defined group of patients. Per CMS, the goal of coordinated care delivered by ACOs is to ensure that patients get the right care at the right time, while avoiding unnecessary duplication of services and preventing medical errors. ACOs may enter into one-sided upside-only arrangements or two-sided risk-based arrangements. If successful, ACOs are rewarded with incentive payment commensurate with meeting quality targets and achieving cost containment for beneficiaries.

Should I join an ACO?

Public and private payers are participating in the formation of ACOs for Medicare and non-Medicare populations. Given the growing interest in ACOs, integrated delivery systems (IDSs), and budget-based payment models, physicians need to position their practice to take advantage of the opportunities; otherwise, the practice may end up a non-participating or out-of-network provider and not privy to any shared savings or enhanced payments. Participating in an ACO or IDS may provide opportunities to increase revenue though additional payment for cost savings, and to decrease expenses by reducing infrastructure and startup costs.

What should I consider when joining an ACO?

There are many factors to consider when joining an ACO, including the designated patient population, organizational structure and governance, health information technology capabilities, configuration and support for the medical home, and payment methodologies. There are also special considerations for rural practices and specialists.

Patient Population

Much of the policy and analytical dialogue on ACOs has focused on population-based care systems, embracing pediatric and adult patients alike. There is risk in bundling the care of children and adults into one organizational structure. Because greater savings may be found in managing care for adults, this may skew the ACO’s primary focus and resources toward adult care. Determine how resources will be spread across the patient population and consider if a pediatric-only ACO may be more appropriate.

Organizational Structure and Governance

Ideally, there should be equal representation on all governance and clinical committees between primary care and specialty physicians. ACOs involving pediatric patients must include an equitable representation of pediatric primary and specialty care. The ACO board must be a separate and distinct entity (i.e., if a hospital or payer developed ACO, the board must be separate from the hospital or payer board of directors).

Health Information Technology (HIT)

From a structural perspective, ACOs require a focused HIT strategy and robust electronic medical records/information technology systems to capture performance data and quality metrics. Pediatricians and hospitals must have effective communication processes in place to ensure information is shared on a timely basis and to promote the efficient and effective delivery of team-based integrative care.

Patient- and Family-Centered Medical Home

Medical homes can be accomplished within a variety of provider configurations, including integrated delivery systems, primary care medical groups, hospital-based systems, or virtual networks of providers, such as within independent practice associations. The ACO should support practice transformation to a patient- and family-centered medical home. This includes but is not limited to practice management support, technical assistance (including HIT), and resources for clinical and non-clinical (community, socio-educational, etc) care.

Payment Methodology

Within the ACO, payment systems and incentives should be aligned internally and externally among providers and payers. The payment methodology must be designed to ensure adequate support for the primary care backbone of the ACO but should not compromise participation of subspecialty physicians. Systems need to be engaged to ensure appropriate payment that recognizes the special elements of pediatric care and distribution to participating providers in an equitable manner.

To align physician and hospital incentives and focus on cost containment, approaches other than the traditional fee-for-service system should be considered, such as bundled payments, shared savings, quality performance payments, risk-based compensation, outcome-based payment, or case-management fees. Quality-performance metrics should be applicable to care for children and be developed with input from primary care and subspecialty care pediatricians.

Special Considerations for Small and/or Rural Practices and Specialty Pediatrics

Additional considerations need to be addressed for subspecialty pediatricians as well as those practicing in rural and/or small practices. An important consideration for practices in rural or medically underserved areas is the provision of and access to an integrated and comprehensive network of care. Providing this level of integrated care will require coordination among various providers and how the ACO accomplishes this is a vital consideration.

Concerning specialty pediatrics, ACOs have primary care physicians at the core, but the ways in which subspecialists can be engaged vary. Medical subspecialists and surgical specialists may join an ACO in the following ways:

  • As a member of a large multispecialty or specialty group that contracts with an existing ACO;
  • As an employed physician in a hospital that joins or forms an ACO;
  • Joining a network of individual practices with primary care physicians to form an ACO.

Existing referral networks are a key factor in determining whether to participate in an ACO. The potential effect on referral patterns may be medical subspecialists’ and surgical specialists' greatest concern with regard to joining an ACO. For patients who seek referrals for specialty care, physician participants in ACOs will likely encourage their patients to see specialists with whom they have good working relationships and are within the referring physician's ACO.

ACOs with high rates of specialty referrals may look at ways to control their costs. It is important for specialists to establish good working relationships with referring members of ACOs and demonstrate the cost-effective benefits of specialty care. Specialists who provide prompt access and are regarded as providing cost-effective, quality-based care can demonstrate to the ACOs the value of their services.

AAP Resources Related to ACOs and Payment Reform  

Principles of Child Health Care Financing
A New Era in Quality Measurement: The Development and Application of Quality Measures 

Other Resources

State ‘Accountable Care’ Activity Map​ (National Academy for State Health Policy)

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American Academy of Pediatrics