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accountable care organization (ACO)

An accountable care organization (ACO) is an association of hospitals, providers and insurers in which all parties assume accountability for the quality of patient care, and how money is spent as it pertains to a population. The ACO oversees a pay-for-performance model that measures patient care and cost control on standard criteria. Healthcare providers according to how well they meet the criteria. Physicians who fail to meet the standards for cost control and patient care receive lower payments from Medicare.

The ACO model also influences how patients are treated throughout the care process. All appointments and tests would be completed under the same health care umbrella, provided by members of that particular ACO. The idea is that if a primary care physician is treating a patient, and additional insight is needed from a specialist, the physician would then refer the patient to that specialist within the ACO. A patient seeking additional care outside the umbrella would likely cost more.

The ACO model is described in the Patient Protection and Affordable Care Act. The act, informally known as "Obamacare," was signed into law by President Barack Obama on March 23, 2010. 

This was last updated in August 2012

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