Medicare's Managed Care Organizations with a Focus on Patient Care Quality and Cost Reduction
Accountable Care Organizations (ACOs) are groups of healthcare providers that collaborate to deliver coordinated, high-quality care under Original Medicare (Parts A and B). These organizations, which have gained significant attention in recent years, are primarily focused on serving Medicare, Medicaid, and underinsured populations.
Establishing and maintaining an ACO can be costly, requiring millions of dollars. However, an ACO must consistently save money each year without incurring losses to earn shared savings through the Medicare Shared Savings Program. To qualify for these savings, ACOs must meet specific quality and performance criteria based on their type.
ACOs aim to enhance patient care while reducing unnecessary costs. By forming or joining an ACO, healthcare professionals aim to avoid redundant tests, minimise medical errors, ensure informed staff, and provide coordinated access to Electronic Health Records (EHRs). This coordination can lead to benefits for patients, such as expanded telehealth services or direct entry into rehabilitation facilities without the need for a prior 3-day hospital stay if their primary care doctor is involved in an ACO.
However, ACOs have faced challenges in achieving success. Insufficient incentives for providers and limited resources have been key obstacles. Despite these issues, the number of ACOs continues to grow. In 2025, 55 brand-new ACOs were founded, and 173 were renewed, marking the biggest yearly renewal in 12 years.
There are various types of ACOs, each with its focus. Some ACOs focus on specific geographic areas or individuals with particular medical conditions. For instance, the Houston County Health Care Authority in Alabama is a physician-led ACO focused on a specific region or community. On the other hand, ACOs that address care for Medicare beneficiaries, especially the chronically ill, are spread across regions and often target Medicare patients, including those with complex or chronic conditions.
Examples of recent Medicare ACOs include ACO REACH and Kidney Care Choices (KCC), which include numerous providers, hospitals, and clinics as their members. These ACOs receive financial support from the Centers for Medicaid and Medicare Services (CMS) to improve care.
A full list of Accountable Care Organizations operating in 2025 can be found on CMS.gov. As the healthcare landscape evolves, ACOs continue to play a crucial role in the drive towards value-based care delivery.
