ACO stands for Accountable Care Organization, a group of doctors, hospitals, and other healthcare providers who voluntarily join together to give coordinated, high-quality care to a defined group of patients, typically those enrolled in Medicare (though private insurers and Medicaid programs use similar models too).
The core idea behind an ACO is to shift healthcare away from a "fee-for-service" system—where providers are paid for every test, visit, or procedure regardless of outcome—toward a value-based model. In an ACO, providers share responsibility for the overall cost and quality of care for their patient population. If the ACO succeeds in delivering good outcomes while keeping spending below certain benchmarks, the participating providers can share in the savings with the payer (such as Medicare). Some ACO models also include downside risk, meaning providers may have to repay a portion of losses if spending exceeds targets.
Key goals of ACOs include:
- Coordinating care across primary care doctors, specialists, hospitals, and other providers so patients don't fall through the cracks between visits or facilities.
- Reducing unnecessary duplication of tests and services.
- Emphasizing preventive care and chronic disease management to avoid costly complications and hospitalizations.
- Improving patient outcomes and satisfaction while controlling overall healthcare spending.
ACOs originated largely from the Medicare Shared Savings Program, established under the Affordable Care Act, but the concept has since expanded into commercial insurance and Medicaid arrangements as well. Patients are usually not required to do anything different when their doctor is part of an ACO — they generally still choose their own providers and are not restricted to a specific network, though their care may be tracked more closely for quality and cost metrics.
It's worth noting that "ACO" can occasionally stand for other terms in different contexts (such as "Aftercare Organization" in some non-medical fields), but within healthcare, Accountable Care Organization is the standard and near-universal meaning.