Accountable Care Organizations ACOs can take many forms, although most continue to pay providers on the basis of volume (e.g., per visit or per procedure) but add incentives to improve quality or reduce costs. Early evidence for Medicare ACOs—more a prescription for health system redesign than an organizational model—sug- gests that some savings have been realized, while measures of quality have remained stable. For example, the Meridian Alliance ACO, which is based in Hackensack, New Jersey, is a Track 1 participant in the Medicare Shared Savings Program (meaning that it is not exposed to losses if it does not generate savings). It generated more than $50 million in shared savings in 2016 and had a quality score greater than 92 percent, so it distributed $22,835,022 to its participants . Most ACOs do not yield this sort of payment. Less than a third actu- ally had savings to share, as savings vary considerably across ACOs, payers, and populations.
Originally a Medicare payment model, ACO contracts have become more common in private insurance than in Medicare or Medicaid. This is not surprising. Private ACOs can reduce costs and improve quality by creating networks of higher-quality, lower-cost providers. (Medicare has fee schedules, not negotiated prices, and cannot exclude any eligible provider.) For example, the Alternative Quality Contract in Massachusetts resulted in higher quality and lower costs, although not enough to offset the costs of running the ACO.
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