Accountable Care Organizations were created by the Affordable Care Act in 2011 in order to improve quality of care and reduce costs for patients and are part of a change from fee-for-service payments towards value-based payments in healthcare.

As I understand it, groups of doctors and hospitals participating in an ACO are encouraged to meet health outcome targets for their patients. ACOs that reduce unnecessary procedures, visits and hospital stays, are rewarded with a share of the savings.

According to the National Association of ACOs "As of January 2019, there are 538 Medicare ACOs serving more than 12.3 million beneficiaries with hundreds more commercial and Medicaid ACOs serving millions of additional patients."

So far, so good. However if a non-ACO provider is bringing in significantly more revenue by encouraging unnecessary procedures, visits and hospital stays, it's not clear to me why they would voluntarily join an ACO to be "rewarded" with a percentage of their lost revenue?! Are there other incentives I'm not aware of?


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