Do ACOs only serve Medicare patients?

Editorial team Published on

No, Accountable Care Organizations (ACOs) are not only for Medicare.

While the federal government popularised ACOs through The Centers for Medicare & Medicaid Services (CMS) programs like the Medicare Shared Savings Program, the underlying model is used across the entire healthcare system.

Commercial and Private ACOs

  • Private insurance: Major commercial health insurance companies (such as Blue Cross, Aetna, or UnitedHealthcare) form private ACOs with doctor groups and hospital networks.
  • Shared savings: Just like in Medicare, commercial ACOs reward doctors and hospitals financially if they lower overall medical costs and hit specific health quality targets.
  • Widespread use: Millions of patients with private, employer-sponsored, or commercial health insurance receive coordinated care through an ACO without realizing it.

Medicaid ACOs

  • State programs: Several state Medicaid agencies use ACO models to manage care and control costs for low-income populations enrolled in Medicaid.
  • Managed care integration: These state-based models coordinate local clinics, behavioral health, and hospitals for Medicaid beneficiaries.

What is the downside of an ACO?

The primary downside of an Accountable Care Organization (ACO) is the potential for downside financial risk and heavy administrative burdens if patient care costs exceed expected targets.

Financial and Administrative Disadvantages

  • Financial Penalties: Under two-sided risk models, if the ACO fails to lower overall healthcare spending below the assigned benchmark, providers must pay money back to the insurer or Medicare.
  • High Upfront Costs: Joining or setting up an ACO requires expensive investments in health information technology, electronic health records, data analytics dashboards, and care coordination staff.
  • Increased Bureaucracy: Providers often face extra reporting requirements, quality metrics tracking, and administrative red tape that can distract from direct patient care.

Operational and Clinical Challenges

  • Loss of Autonomy: Physicians may feel their clinical freedom is restricted by institutional guidelines, utilization reviews, or network-preferred referral patterns.
  • Complex Management: Aligning incentives, corporate cultures, and policies across large networks of independent doctors, specialists, and hospitals is difficult and prone to friction.
  • Data and Privacy Hurdles: Sharing extensive patient data across different provider systems creates technical barriers and privacy management challenges.

How do ACOs get paid?

Accountable Care Organizations (ACOs) get paid through a combination of traditional fee-for-service reimbursements and value-based financial incentives tied to the cost and quality of care.

Core Payment Mechanisms

  • Fee-for-Service (FFS) Baseline: Individual doctors and hospitals in an ACO continue to submit regular claims and receive standard FFS payments from payers like Medicare or private insurers.
  • Shared Savings Bonuses: If the total cost of caring for the ACO's assigned patient population stays below an established financial target (benchmark), the organization earns a portion of those saved dollars.
  • Quality Performance Scores: To receive shared savings, the ACO must meet strict benchmarks on designated quality-of-care measures. Higher quality scores unlock larger bonus percentages.
  • Downside Risk (Two-Sided Models): In more advanced tracks, such as those overseen by the Centers for Medicare & Medicaid Services (CMS), ACOs may have to repay a portion of losses if spending exceeds the target benchmark.

Can you opt out of an ACO?

You cannot opt out of being assigned to an Accountable Care Organization (ACO), but you can opt out of Medicare sharing your personal health and claims data with them by calling 1-800-MEDICARE.

How ACOs Affect You

  • Not an insurance plan: An ACO is a group of doctors working together, not a new health plan.
  • No provider limits: You keep your full Original Medicare rights and can see any doctor who accepts Medicare.
  • Automatic assignment: If your primary doctor joins an ACO, Medicare places you in it automatically for better care coordination.

How to Opt Out of Data Sharing

  • Call Medicare: Dial 1-800-MEDICARE (1-800-633-4227) to stop Medicare from sharing your personal medical data.
  • What stays shared: Even if you opt out, Medicare may still share basic, non-identifiable information to measure health quality.
  • Switch doctors: You can choose to see a doctor who is not part of an ACO at any time.

Is ACO reach Medicare or Medicaid?

ACO REACH is part of Medicare, not Medicaid.

💡 Program Basics

  • Federal Program: Run by the Centers for Medicare & Medicaid Services (CMS).
  • Target Audience: Designed for people enrolled in Traditional (Original) Medicare.
  • Goal: Improves care coordination and adds preventive benefits for seniors and individuals with Medicare.

What's Wrong with Accountable Care Organizations (ACOs)?

9 related questions found

Is ACO reach ending in 2026?

Yes, the ACO REACH Model is scheduled to end on December 31, 2026, marking the conclusion of its four-year performance period.

Transition to the LEAD Model

  • Replacement: The Centers for Medicare & Medicaid Services (CMS) Innovation Center is launching the Long-term Enhanced ACO Design (LEAD) Model to take its place.
  • Timeline: LEAD begins on January 1, 2027, and is structured as a 10-year initiative running through 2036.
  • Focus: The new model aims to support smaller independent providers, rural practices, and organizations serving complex or dually eligible beneficiaries.

Key Considerations for ACOs

  • Final Year Adjustments: Performance Year 2026 brings updated risk score caps and adjusted regional benchmark weightings under CMS Guidelines.
  • Alternative Pathways: Organizations not transitioning to LEAD are evaluating shifts to the permanent Medicare Shared Savings Program (MSSP) or other commercial options.

Are ACOs good for patients?

Accountable Care Organizations (ACOs) generally benefit patients by improving care coordination, reducing duplicate tests, and focusing on preventive health.

What is an ACO?

  • An ACO is a group of doctors, hospitals, and other health care providers who work together voluntarily.
  • They give coordinated care to patients, especially those on Medicare.
  • An ACO is not an insurance plan or an HMO.
  • You keep your standard doctor choice and Medicare rights.

Potential Benefits for Patients

  • Better Coordination: Your doctors share your medical information to avoid mistakes and redundant tests.
  • Preventive Focus: ACOs emphasize annual wellness visits and screenings to catch health problems early.
  • Same Freedom: You can still see any doctor or hospital that accepts Medicare.
  • Learn more about patient rights and details directly from the Centers for Medicare & Medicaid Services.

Potential Drawbacks or Criticisms

  • Passive Enrollment: Patients are often assigned to an ACO automatically based on where they get primary care.
  • Variable Experience: Because each ACO manages its own programs, the level of patient engagement and local quality can vary.
  • Mixed Cost Results: Some critics argue that the model has not consistently lowered overall healthcare spending as originally projected.

How many Medicare beneficiaries are in ACOs?

An estimated 14.3 million Medicare beneficiaries are enrolled in Accountable Care Organizations (ACOs) as of January 2026, according to data from the Centers for Medicare & Medicaid Services.

Breakdown by Program

  • Medicare Shared Savings Program (MSSP): Serves 12.6 million traditional Medicare beneficiaries across 511 participating ACOs.
  • ACO REACH Model: Provides care to approximately 1.7 million beneficiaries through 74 participating ACOs.
  • Kidney Care Choices (KCC) Model: Serves 237,000 beneficiaries with chronic kidney disease or end-stage renal disease.
  • ACO Primary Care (PC) Flex Model: Serves 359,720 beneficiaries while testing new primary care payment options within the MSSP.

How to qualify for ACO?

To qualify for a Medicare Accountable Care Organization (ACO) program, healthcare providers must review guidelines at the Centers for Medicare & Medicaid Services and meet specific operational, patient, and structural criteria.

Core Qualification Requirements

  • Patient Minimum: Serve and be assigned a minimum of 5,000 Medicare fee-for-service beneficiaries.
  • Commitment Term: Agree to participate in the program for at least a three-year contract period.
  • Legal Structure: Form a distinct, authorized legal entity with a valid Tax Identification Number (TIN) if billing under separate identifiers.
  • Governance: Establish a governing body where participating providers hold at least 75% voting control, including Medicare beneficiary representation.
  • Care Coordination: Implement clinical systems to promote evidence-based medicine, manage health needs evaluations, track quality metrics, and encourage patient engagement.
  • Technology: Utilize Certified Electronic Health Record Technology (CEHRT) across participating providers.

Which problems would accountable care organizations (ACO) solve?

Accountable Care Organizations (ACOs) solve problems related to fragmented, uncoordinated, and expensive healthcare by making groups of doctors and hospitals share financial and medical responsibility for a group of patients.

Fragmented Care and Poor Communication

  • Siloed providers: In a standard system, primary doctors, specialists, and labs rarely talk to each other. ACOs link these providers together so they share medical histories and electronic health records.
  • Repeated tests: Disconnected care often forces patients to retake expensive X-rays or blood tests because previous results are missing. ACO sharing cuts out these duplicate procedures.
  • Medical errors: When multiple doctors prescribe drugs without knowing what others ordered, dangerous drug interactions happen. ACO networks track medications to prevent these mistakes.

The Flaws of the Fee-for-Service Model

  • Rewarding quantity over quality: Traditional insurance pays doctors for how many tests or procedures they do, which encourages waste. ACOs shift toward value-based care, rewarding teams when patients stay healthy and costs go down.
  • Lack of accountability: Under old models, no single entity is responsible for a patient's overall well-being across different settings. ACOs accept joint accountability for total costs and care quality for a defined patient group.

High Costs and Missed Prevention

  • Ignored chronic conditions: Traditional care reacts to sickness rather than preventing it. ACOs emphasize wellness visits, screenings, and regular tracking for chronic illnesses like diabetes or high blood pressure.
  • Unnecessary hospital visits: Poor management of chronic diseases leads to costly emergency room visits and readmissions. ACO coordination keeps patients stable at home and out of the hospital.