Accountable Care Organization and Its Payment Model

Accountable care organizations (ACO’s) are future of USA healthcare system. It is an idea of how USA wants to see its future healthcare system that goes beyond just billing for services to wellness of a defined population. ACO is a group of doctors or coordinated care system under one legal entity i.e. Medicare. It works with the aim of improving health outcomes and reducing healthcare expenditures. Till the time there are about 221 ACOs working across 45 states. ACOs are growing at an exponential rate and providers are quickly moving to be part of an ACO.  After becoming a successful part of an ACO, the physicians will get payments according to one of following methods:

1. Shared savings
2. Advance payments
3. Bundled payments

Most of the ACOs will adopt the policy of advance payments. The success or failure of ACOs depends on how effectively it improves patient care and reduces healthcare expenditure. Let’s see how many ACOs survive in coming years. According to this policy, there are three types of payments that providers can expect by participating in ACO.

•  Fixed payment
• Variable payment depending on number of beneficiaries
• Monthly payment depending on size of ACO.

Basic purpose of its launch is to amplify the providers’ role in joining or establishing an ACO. This paradigm will positively encourage a number of providers to gain the potential benefits of ACO’s, with extensive reduction in administrative expenses & increase in their practice revenues. Pursuing new trends of payment model will help the providers to deliver lower-cost but high-quality health care that will bring a better care coordination system in future.