The way people choose to pay for their healthcare has undergone a radical transformation in recent decades. Fee-for-service is still the most traditional payment model, but it is not the best one.

This system proposes that healthcare services need to be unbundled and paid for separately by the patient. But it’s based more on volume than on the quality of services provided. Some patients get too much care while others don’t get enough, and prices go up because healthcare providers aren’t accountable for treatment outcomes.

A few years ago, the search for a more efficient and fair healthcare payment system concluded that the priority should be better care, not more care. Several models have been tested, and one of the most successful so far is the adoption of Accountable Care Organizations (ACOs).

How Do Accountable Care Organizations Work?

Created in 2012, ACOs are groups of hospitals, physicians, clinics, and other healthcare providers that come together to provide high-quality, lower-cost, more coordinated treatment for Medicare patients.

It’s not a service you can hire, like traditional health insurance. The physician in charge of your treatment must belong to an ACO, so you will automatically be assigned to the same organization.

The main goal of an ACO is to make sure the patient gets better, seamless healthcare – especially those suffering from chronic conditions such as diabetes or heart diseases. Its providers work together to evaluate diagnoses and suggest the best treatment for each patient. This strategy allows to bring down costs while improving care quality.

By moving away from the “billing per procedure” model, ACOs reduce or avoid repeated/unnecessary medical services. Whenever this happens and financial resources are saved, these savings are shared with Medicare.

For now, the experiment seems successful. A 2020 paper concluded that Accountable Care Organizations are performing better than their fee-for-service counterparts.

How Can Patients Benefit From ACOs?

Under the traditional healthcare payment model, the patients are responsible for coordinating their treatment and seeking out specialists on their own.

This system can lead a patient to several different doctors (paying for each appointment), who in turn can prescribe repeated or conflicting medications and treatments. This happens because one doctor usually doesn’t know what the other is prescribing and is concerned only with his/her part of the treatment.

ACOs, on the other hand, are groups of experts that come together to provide fair, more coordinated, and less confusing care across multiple healthcare providers.

Here are some of the advantages of this system:

• Better Care at Lower Costs– Physicians participating in an ACO share their patients’ medical history information to ensure that their treatment is coordinated by specialists and that they receive the best care possible. All the strategies will be aimed at curing the patient sooner and faster, which means lower costs.
• Coordinated Care– The specialists work closely to provide coordinated care for the same patient. It’s different from the traditional model, in which a patient can see two different specialists in a short interval and one doctor ends up not knowing what the other is prescribing, or requires repeated tests.
• Healthier Individuals– While the fee-for-service system just treats the patients when they’re sick (because there are more financial incentives), doctors in an ACO strive to keep their patients healthy and away from hospitals for as long as possible.
• Increased Accountability From Healthcare Providers– accountable care organizations keep the doctors accountable. Whenever they can demonstrate to Medicare that their patients’ health is improving, they get paid more. In short, ACO’s physicians are paid by results, not volume.

Can Healthcare Practitioners Benefit Too?

The participation of healthcare providers in an ACO is voluntary. But doctors and other practitioners can also benefit from it.

Whenever a patient receives better care, the money saved through responsible practices goes back to Medicare. The healthcare providers that participate in the ACO get a share of those savings.

That’s why many providers decided to join in a network to offer high-quality healthcare, bring down costs, and earn incentive payments. Some may come to a point asking themselves, “what is revenue cycle management’s use in healthcare?” By looking more closely at ACOs, they might find their answer.

One of the main tools used by accountable care organizations to ensure that their providers are improving the quality of care is the EHR system. These electronic forms bring together a wealth of clinical and financial data that the specialists can share to ensure the best treatment for each patient.

The Future of Healthcare?

Since the format was put into practice in 2012, ACOs have spread across the United States. According to the National Association of ACOs, as of early 2022, there were 483 Medicare ACOs with more than 11 million beneficiaries, and at least 1,200 organizations have held an ACO contract across the country.

Is it possible to say that accountable care organizations are an evolution of the system and represent the future of healthcare? It may still be too early, but the payment model is certainly fairer than the traditional fee-for-service.

The popularization of Accountable care organizations also requires that more and more providers are connected to new developments in technology so that their healthcare professionals stay in contact. This is good for everyone – hospitals, doctors, and patients.