Which statement best describes an Accountable Care Organization (ACO) model?

• A. Providers pay, costs are shared savings, patient choice expansive and in broad networks, and Medicare runs on ACO models, rewarded for outcomes.
• B. ACOs are insurer-run and operate on fixed budgets; serve as liaisons between patients and providers; more limited to in-network services; Medicaid delivered through MCOs; care is delivered through a fixed budget.
• C. Patients are charged per service with no consideration of outcomes.
• D. ACOs primarily focus on increasing hospital admissions.

Answer: (A)

An Accountable Care Organization is built to tie payment to both quality and cost, with providers working together to manage the care of a defined patient population. In this model, when the ACO reduces total spending while meeting established quality metrics, the participating providers share in those savings. This creates a strong incentive to coordinate across settings, prevent unnecessary tests, and manage chronic conditions effectively, all aimed at better outcomes for patients. Patients typically have broad choice within the ACO’s network, and Medicare uses these arrangements to reward providers for delivering care efficiently and to higher standards. The other descriptions don’t fit this approach: one describes fixed budgets and insurer-led control, which isn’t how ACOs operate; another describes per-service charges with no regard to outcomes, which aligns with traditional fee-for-service; and the last focuses on increasing hospital admissions, which runs counter to the goals of cost containment and quality improvement.