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by Madeline Angela Meyer and Michael Alan Meyer, September 6, 2012

The primary objectives of the ACOs are to promote continuity of care and seamless quality health services that are patient-centered while control medical costs. If this does not sound familiar to those who were in Medicine in the 1990’s, … does PPMC, IPA, MSO, PHO, IDS and our personal favorite CCW under the guise of market competition ring a bell? So, how are the ACOs different from previous market reform models? Most important how will it affect provider relationships with their patients, payers and vendors?

To begin with, ACOs are “global payer systems”. Under the new Innovations CMS website, the ACO is explained. The “ACOs are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to the Medicare patients they serve” (Innovation, CMS, 2012). How they differ from previous models is that they are specifically being created to care for the Medicare populations. The cost savings in the model is bestowed directly to Medicare its beneficiaries. Providers within the ACO are capitated and performance driven. Providers share in cost savings in the form of bonuses. So, we like to think of the ACO as the new market competition, but with a government spin.

As we move into this new era of healthcare reform, it is prudent for the providers to reevaluate the relationships within their medical practices. Small practices will not meet the requirements of the ACO. Large ACO health systems will obviously acquire entire Medicare markets and thus need the services of the small practices. So, the next few years may prove to be a vibrant healthcare market evaluation.

Attached is a presentation to guide you in understanding ACO dynamics and what will need to be addressed, e.g., evaluating relationships with patients, operational infrastructure (support staff and medical billing software systems…), payer contracts, and vendor contracts within the ACO model.

Link to ACO Presentation.


Affordable Care Act. (March 23, 2010). Read the Law. Patient Protection and Affordable Care Act (Pub. L. 111–148). Health Care and Education Reconciliation Act, of 2010 (Pub. L. 111–152). http://www.healthcare.gov/law/full/

Brookings Institute. (2011). ACO Toolkit. Engelberg Center for Healthcare Reform. The Darmounth Institute. January 2011. http://www.acolearningnetwork.org/

Innovations CMS. (2012) Accountable Care Organizations. http://www.innovations.cms.gov/

Shortell, PhD, M.B.A., M.P.H, Stephen M., Casalino, MD, PHD, Lawrence P. (2007). Accountable Care Systems For Comprehensive Health Care Reform. [workshop] “Organization and Delivery of Care and Payment to Providers”. March 1 and 2, 2007


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