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March 23, 2021

What Are Accountable Care Organizations, and How Do They Impact the Cost of Employee Benefits?

Artemis Health

With healthcare costs continuing to rise each year, self-insured employers are turning to Accountable Care Organizations, or ACOs, as a means of improving efficiency. The popularity of ACOs can be at least partially attributed to the Affordable Care Act, which encouraged hospital groups and doctors to form ACOs for Medicare/Medicaid and rewards those that keep patients healthy. Alongside strategies like network steerage and value-based care models, Accountable Care Organizations are one way employers are seeking to measure and improve population health. 

But what exactly is an Accountable Care Organization and what does it mean for private healthcare? Are ACOs really a way to reduce the cost of employee benefits? Let’s look at this question in depth and explore some data that will help benefits leaders understand the impact of working with ACOs. 

What is an Accountable Care Organization (ACO)? 

An Accountable Care Organization, often abbreviated ACO, is a group of hospitals, providers, and clinicians who coordinate to deliver high-quality care to a group of patients. It’s a common model for Medicare patients, who are directed to certain hospital systems or clinics for their care, though it’s increasingly popular with private health insurance as well. ACOs share patient medical records, population health data, and treatment plans across the entire organization to deliver seamless care and reinforce best practices. 

ACOs are financially incentivized to provide efficient, effective care, particularly when it comes to Medicare patients. If the ACO finds savings, reduces errors, and creates healthier patients, they may be rewarded with bonuses. The idea is to reward hospitals and doctors when they provide better care, not just more care. 

An ACO will include primary care physicians, which are the pivot point around which all care revolves. It will also include specialists, hospitals, acute care, and pharmacy providers (sometimes private companies like CVS). PCPs within an ACO will coordinate care, recommend specialists, and track patient health over time. The idea is to reduce duplicate services, close gaps in care, and ensure preventive services are being delivered. Private insurance ACOs work similarly to those being tapped by the Medicare program. Kaiser Health News explains: 

“In private ACOs, insurers can also play a role, though they aren’t in charge of medical care. Some regions of the country, including parts of California, already had large multi-specialty physician groups that became ACOs on their own by networking with neighboring hospitals.”

Aside from better patient health and outcomes, ACOs are also believed to be a route to more efficient, less costly healthcare in the U.S. Self-insured employers who contract with ACOs expect predictable payment models and efficiencies gained from coordinated care. Here’s an example of what that might look like for a patient. 

  • The patient visits their primary care physician for an annual check-up
  • The PCP notices that the patient (female, aged 67) has not received regular mammograms 
  • The PCP and patient schedule a mammogram 
  • Breast cancer is detected, and the patient begins treatment with an oncologist within the same ACO 
  • The PCP is kept in the loop on the patient’s progress and outcomes through a shared electronic medical records system 
  • The patient recovers and is cancer free, and the PCP continues to follow up during annual check-ups

From the patient’s perspective, this is a pretty seamless experience. Their care within an ACO is coordinated and proactive, and their primary care physician is kept in the loop for future care. The efficiencies gained, coupled with agreed-upon payment models, also benefit the payer. 

What Can Self-Insured Employers Expect from an ACO? 

Artemis Health works with hundreds of self-insured employers and their benefits advisors to track population health, and those who work with ACOs often want to know if their strategies are working. We took a deep dive into our sample data set to compare ACOs to other provider networks, and here’s what we found. 

When it comes to demographics, the sample data shows that members using the ACO pretty closely resemble those not using an ACO. We have a similar number of members with very similar resource utilization profiles in each group. That makes it a little easier to compare the two groups.

Charts showing demographic info for patients in ACO vs. not in ACO


Next, let’s look at employer healthcare costs.

Healthcare costs for ACO patients
Healthcare costs for non-ACO patients


Our sample data on costs shows a divergence. The allowed amounts between ACO and non-ACO options are quite different, and you can see a PMPM allowed amount for medical plus prescriptions at $510 for the ACO and $577 for the non-ACO group. 

Preventive care compliance for ACO patients
Preventive care compliance for non-ACO patients


When we compare the rates of preventive care among these members, we see that across the board, ACO participants are seeking preventive care screenings at slightly higher rates than those in the non-ACO group. The breast cancer screening rates are particularly interesting, with 55.4% of ACO patients vs. 47.3% of non-ACO patients getting screened.

Finally, let’s take a look at gaps in care. 

Gaps in Care compliance for ACO patients
Gaps in Care Compliance for non-ACO patients

It’s a similar finding to the rates of preventive care, with ACOs consistently (though only slightly) outperforming non-ACOs in this sample data. So what conclusions can we draw from this data? 

  1. The plan’s allowed amounts for ACOs vs. non-ACO providers are much lower. 
  2. Members within the ACO are seeking preventive care visits and screenings at a higher rate.
  3. Members within the ACO are also more compliant with gaps in care screenings and tests than those seeing non-ACO providers. 

While the percentages aren’t dramatically different, these small measures can make a big difference in member health and well-being. We know that early screening for cancers can be the difference between a treatable illness/positive outcomes and severe illness/death. We know that preventive visits are correlated with better population health. We know that catching a disease early can make a huge difference in the patient’s treatment plan and quality of life, and also in the costs for payers. 

ACOs, if they can deliver consistent results and high-quality care, can be an effective tool for employers looking to improve their population health. 


Data can also help employers track, measure, and improve employee health and well-being. Watch our 2-minute demo video to learn more. 

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