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Issue Brief
June 2013

Accountable Care Organizations (ACOs) in Medicaid: Challenges and Opportunities for Advocates

This brief examines how accountable care organizations work and explains how health care providers are rewarded for the quality of care—not the quantity.

Health care providers in accountable care organizations have agreed to be equally responsible for improving patients' health, and a portion of their payment is tied to whether the whole group succeeds. If the group improves or maintains patients' health while keeping the cost of care below a benchmark, they keep a portion of the savings or receive an alternative reward. This creates a financial incentive for providers to work as a team and to improve how they deliver care.

By implementing this model of care in their Medicaid programs, states have the potential to improve patient care while controlling costs.

But accountable care organizations for Medicaid beneficiaries must be designed properly and equipped to overcome the barriers that have made it so difficult to provide coordinated, timely care to Medicaid patients in the past.

Advocates and proponents of implementing this model in state Medicaid programs should consider this brief an essential resource for planning ahead and preparing for any roadblocks.