Is It Really an ACO



Collectively, we are trying to bend an iron-stiff cost curve by moving from a system of hospital dominance to more cooperation with physicians. We’re replacing costly and inefficient fragmented care with accountable care, where a coordinator is incentivized to drive efficiencies for the patient. Bringing more people under the tent of insurance coverage is critical to this process.

Those are all good things, but the process of bringing those goals to fruition can be a headache. Accountable care organizations (ACOs) are emerging at an extremely fast pace throughout the nation. The country’s ACO tally has jumped to 606, more than four times the ACOs listed in 2011, when there were 138. And Mercer’s National Survey of Employer-Sponsored Health Plans 2014 found the use of ACOs growing rapidly among the nation’s largest employers — from 25% in 2013 to 33% in 2014.



Promises to improve health care quality and implement efficiencies to keep costs at bay have spurred ACOs’ stellar growth. You’d be hard pressed to find any health care provider not considering an ACO future.

According to the Centers for Medicare & Medicaid Services (CMS), an ACO is "an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it." Quite a broad definition.


So how can you spot the real ACO versus the pretender?


One quick way to spot a real ACO could be the use of accreditations like the National Committee for Quality Assurance. In the absence of a greater level of accreditation for ACOs we must look at the basic characteristics that support the Triple Aim: Better patient experience, better health, and lower per capita cost.


The characteristics or processes that support a top-tier ACO are:

  • ACO leadership — Physicians must play a strong role in leadership/ownership of ACOs. Physician-led ACOs outperform other ACOs in the areas of quality performance monitoring and reporting to participating clinicians, and measurement of financial performance at the clinician level, according to a national survey of ACOs published in an August 2014 edition of Health Affairs. 
  • Health IT integration — The availability of an organization-wide integrated health data system is a key feature of an ACO. Many ACOs claim data integration but few have truly implemented system-wide platforms for sharing critical data, identifying and monitoring practice patterns, documenting outcomes, and reporting financial performance. Integrating outside data sources like pharmacy and community-wide resources is also essential. In 2012, CMS’ own Pioneer ACO Model program required at least 50% of the ACO’s providers meet requirements for electronic health records to receive incentive payments. Many would say that this is a minimum standard.
  • Improved care — The Institute of Medicine’s definition of quality lays a great foundation to evaluate ACOs. The fundamental question is what are the ACOs doing to ensure that care is Safe, Timely, Efficient, Effective, Patient Centric, and Equitable (STEEPE). For example, does the ACO measure, report, and adjust practices to improve access or timeliness of care? What practices or monitoring is available to ensure the effectiveness of care? Does care meet accepted guidelines? What processes are in place to eliminate waste? Where the ACO is headed may be more important than where they are today. That’s another way to identify the pretender versus the real ACO.
  • Payment reform — Moving away from a fee-for-service structure is another differentiator for top performing ACOs. Paying for an episode of care, or by population, holds greater promise for improving delivery and controlling cost. The pretend ACOs may take risk and receive population-based payments, but their network of providers, the ultimate delivery of care, may still be based on a fee-for-service structure.

Until accreditation and additional publicly available data mature, it will be difficult to tell the pretenders from the real ACOs. In the absence of better measures, remember the basic tenants of the triple aim and the ACOs’ ability to integrate data, improve care, reform payments, and provide quality health care leadership.



Eric Bassett is a senior partner and leader of Mercer’s Health and Benefits business in the Central market, based in Dallas.

Eric Bassett
by Eric Bassett

Senior Partner, Association and Affinity Leader, Mercer

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