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3 Things to Consider Before Joining an ACO

If you are a part of an organization that provides healthcare services, you’ve seen big changes in how services are paid. The days are numbered for a simple fee-for-service payment system. Providers dependent on fee-for-service face increasing financial risk going forward. Payment contracts are shifting to “value-based payments,” where quality and efficiency are considered in the payment for services. One of the most popular new healthcare delivery models for value-based payments is the Accountable Care Organization or ACO.

How do ACOs work?

In the ACO model, providers work together to be accountable for the health of a defined population of patients. They are a population health model and providers are rewarded for the collective quality and efficiency of care provided. ACOs are growing in popularity in all three payer categories: Medicare, Medicaid, and commercial insurances.

ACOs are growing!

One study, Center for Health Care Strategies, Inc. (CHCS) showed that in 2017, more than 10% of all insured populations were in ACOs.

A Medicare ACO is a contractual agreement between a practice and an administrative organization. Similar agreements may also apply to Medicaid or commercial ACOs. Each ACO has a set of rules and conditions for participation needing careful review before joining. Here are three things an organization should consider if they are thinking about joining an ACO.

#1: Commitment to Measurement and Improvement

One of the first decisions to consider is the philosophy of an ACO and whether its right for you and your practice. Focus on accountability. ACOs require measurement of quality and cost and participating practices can expect to spend a fair amount of time collecting and reviewing quality and efficiency data.

#2: Sharing Risk

ACOs come in different flavors. Some ACOs only share savings when compared against a cost benchmark. If the actual cost is below benchmark, the ACO earns savings. Other ACO models share both savings and risk in case costs exceed benchmark. Because losses in an ACO can be substantial, its critical for a practice to fully understand the potential liability of an ACO contract that includes loss provisions.

Mingle Analytics would be happy to help you understand the various models and to talk through some of the decision points you want to consider in any ACO contract.

#3: Financial Benefit

ACOs bring a new opportunity for healthcare providers to provide high-quality care and earn financial rewards not available in the fee-for-service world. Taking care of a population, “Population Health” is a different model of delivering care. Health IT plays a very important role to understand which patients have recently been admitted or discharged from the hospital, need preventive health services and chronic care management. Managing an ACO strategy requires an EMR and health IT that informs the practice team in advance with the right information, at the right time, on the right population of patients. Having accurate, actionable information is a necessity in providing high quality, low-cost care.


Don’t make a hasty decision when considering joining an ACO. Although there are great benefits to participating in ACOs, organizations need to make a strategic decision based on many considerations if they want to fully understand and gain the benefits before joining. This will help to ensure that organizations are selecting the right ACO that will work best for them and that they are not putting their financial well-being at risk.

What questions do you have about joining an ACO? Post them in the comments and we’d be happy to do our best to provide some additional information.

Interested in learning more about ACO opportunities? Organizations can learn more through their state medical society. State hospital associations are also good sources of ACO information. We at Mingle Analytics would be delighted to help you understand potential opportunities to join ACOs in your area. We have an experienced team of clinical and technical experts available to help your practice in all aspects of ACO participation.

Contact us today! We would be pleased to provide consultation to you from choosing to join an ACO to establishing a practice strategy to succeed an ACO.

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+ Post a Comment
    Author’s gravatar

    We recently signed up tentatively for a Next Gen ACO which is following a model where services are billed on FFS basis as usual to CMS (no discounted FFS rates), but paid by the ACO, while the NG ACO receives a population based capitation payment (AIPBP). This NG ACO guarantees a 5% bonus with potential additional shared savings bonuses. It appears that even if there is no shared savings bonus payment, the maintenance of the FFS rates (assuming no delay in payments from the ACO) and the guaranteed 5% bonus payment make this a no-brainer program. Is this too good to be true? This appears to be a legitimate model under the NG ACO program.

    Author’s gravatar

    Thanks for the question. “Too good to be true,’ could be the case here. It is really hard to tell. Next Generation (NG) ACOs are an Advanced Alternative Payment Model (APM) under the Quality Payment Program and qualify for the 5% lump sum bonus. However, to be eligible for the 5% the patient population or payments must reach the minimum Part B thresholds that get billed through the ACO (20% of attributed population receive services or 25% of charges).

    However, it will be important to understand the details of the AIPBP. From what we understand, even though you submit bills to CMS under FFS, CMS pays the ACO for those services in the form of a capitated payment (PBPM). The capitated payment is an estimate of a discounted FFS amount. As an ACO participant, it is up to the participant agreement you have with the ACO as to how and how much you are paid for these same services.

    In addition, NG ACOs are a “shared risk” model. If the capitated payments to the ACO exceed the amount that would have been paid under FFS, then the ACO could end up owing CMS money, or vice-versa. How you as a participant would be responsible for additional payment to CMS or benefit from additional payment from CMS would also be spelled out in the participation agreement you have with the ACO.

    So in summary read your participation agreement carefully to understand exactly what your payments and responsibilities will be and if you are assuming any of the shared savings risk. If you are, it could wipe out the 5% bonus.

    Contact us if you’d like additional information to clarify the issues in making this important decision.

    Gay De Hart
    Senior Vice-President, Special Projects
    Mingle Analytics
    866-359-4458 x3003 | Direct 207-591-9162 | Fax 844-659-7338 | Cell 207-357-5517 PO Box 82, South Paris, Maine 04281 |

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