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ACOs: What to Know and Why They Matter

ACOs: What to Know and Why They Matter

August 29, 2023

August 29, 2023

By Blake Farmer, Head of Content

By Blake Farmer, Head of Content


Accountable Care Organizations have existed for more than a decade, but the role of an ACO remains widely misunderstood. This handy guide hits the high points.


  • 1 in 5 Medicare patients are now served by an ACO with CMS pushing for 100% by 2030.

  • $1.8 billion Medicare savings from ACOs in 2022, continuing a 6-year streak of reducing costs.

  • 700,000 providers participate in an ACO, with 63% receiving shared savings. 

ACCOUNTABLE — Physicians take responsibility for their patients and are rewarded for it.  

  • The 2010 Affordable Care Act brought about the ACO as part of a larger strategy to reduce runaway costs. The entities are charged with helping physicians improve care and lower costs for Medicare, Medicaid and commercial health plans.  

  • The financial risk shifts from health plans to providers themselves. With skin in the game,  
    doctors have more incentive to, for example, fit in same-day appointments instead of sending  
    a patient to the ER. They avoid ordering redundant tests or unnecessary specialist visits.  

  • At first, ACOs only saw upside, like a bonus. Now ACO REACH offers full-risk tracks.  

  • If Medicare thinks it will cost $12,000 to care for Mrs. Jones and with better coordination it costs $9,000, full-risk providers and their ACO keep the difference — so long as they also hit quality metrics.   

  • But the ACO can also lose — and many do. If this fictional patient costs $20,000, the full-risk ACO funds the overage. That’s how Medicare and other payors benefit. 

CARE — Care constantly improves because ACOs can’t win unless patients and providers win first.   

  • Put simply: primary care doctors become the quarterback of care, and wellness rules.   

  • ACOs can help providers with remote nurses to manage complex patients between appointments and assist after hospitalizations.   

  • Some ACO operators, like Wellvana, have even hired pharmacists to reconcile prescription medications and social workers to guide patients struggling with social determinants of health like transportation.  

ORGANIZATION — Providers work as a team, even on other sides of the country.  

  • Initially, ACOs were mostly linked to health systems and focused on keeping patients within their networks.   

  • Increasingly, the most successful ACOs are made up of independent physicians, led by organizations that are in the business of value-based care.   

  • While ACOs do need a local network of like-minded specialists to succeed, a single ACO can have primary care providers scattered from coast to coast.   

  • To distribute the financial risk, CMS calculates savings rates collectively, promoting shared accountability.

  • Bottom line: ACOs prioritize the doctor-patient relationship — the way medicine is meant to be.   

Are you a doctor interested in joining a Wellvana ACO? See how your practice could perform by using our calculator.