ACO Resource Center

About ACOs
An Accountable Care Organization (ACO) refers to a network of health care providers, including doctors, hospitals, and other non-physician health care clinicians, who work together through various integration models to coordinate care.

Integrated care
ACOs have arisen from the presumption that health care is fragmented and that much of the high cost of health care stems from duplication of care (lab work, tests, etc.) and an overall lack of coordination of care. Proponents of ACOs argue that costs can be significantly reduced by creating a network of providers who can coordinate care.

Quality care

There has been a shift within the health system environment that emphasizes the need for more cost-effective and quality care. The Patient Protection and Affordable Care Act stipulated that Medicare Shared Savings Program (MSSP) ACOs report on 33 quality measures that would be phased in during the three-year ACO contract. Although many of those measures are not specific to the specialty of dermatology, there are several that could apply.

CMS and ACOs
ACOs are being formed in both the public and private sectors. CMS offers three ACO programs: The Medicare Shared Savings Program (MSSP), Advance Payment Model, and the Pioneer ACO Model (which is no longer accepting applications). CMS has recently added 89 new ACOs that are estimated to benefit 1.2 million Medicare recipients. CMS also has issued startup funding for 15 Advanced Payment Model ACOs.

Medicare ACO and cost savings

ACOs can share in savings under the Medicare Shared Savings Program (MSSP). CMS develops a benchmark for each ACO based on estimates of what total expenditures for Medicare fee-for-service Parts A and B would have been without the ACO structure. This benchmark is updated or reevaluated every year within the three-year performance period. Any cost savings above the benchmark are shared between the payer and the ACO. In some models, ACOs that do not meet quality measures and do not achieve cost-savings targets may be held accountable for losses.

Patients and ACOs

ACOs were not conceived to be managed or capitated care systems — like those that were prevalent in the 1990s — and reimbursement, at least in Medicare-base programs, remains fee-for-service. Patients in ACOs do not necessarily elect to participate in ACOs and may not even know that they are participants. Some models may assign patients retrospectively to an ACO.

Physicians and ACOs
Health care providers’ participation in ACOs is voluntary. Specialists can join more than one ACO, but should evaluate local circumstances carefully prior to making that decision.

Dermatologists and ACOs

ACOs were originally designed to provide shared savings to primary care providers who successfully reduce costs via coordinated care. Not all ACOs include specialists. Dermatologists can participate in ACOs by becoming a member of an ACO, a large specialty or multispecialty group that contracts with an existing ACO, by gaining employment in a hospital that joins or forms an ACO, or by joining a network of individual practices to join an ACO. Dermatologists do not have to join an ACO — they can contract with independent physicians (IPS) or primary care practices who have formed ACOs.

Referral patterns
An issue of concern for dermatologists may be ACOs’ potential effect on referral patterns. At least within Medicare ACOs, patients can continue to see any physician of their choice. They are not limited to seeing providers in the ACO. Therefore, patients who already have an established relationship with a dermatologist can continue to see that dermatologist. However, for patients who seek referrals for dermatological care, physician participants in ACOs will likely encourage their patients to see dermatologists with whom they have good working relationships and likely those who are within the referring physician’s ACO.

ACOs: Yes or no?
Whether a dermatologist should join an ACO is dependent on a number of factors. Evaluate all of the angles before making your decision. Use the resources below to begin your personal decision-making process.


The formation of Accountable Care Organizations (ACOs) is one of the many options explored to reduce spending while improving clinical outcomes and enhancing care services.

The AAD's ACO Resource Center not only provides clear information about what an ACO is, but also contains tools to help you make an informed decision about whether joining an ACO is right for you.

Are you ready to join an ACO?

Click on the infographic to open it in a PDF.
Are you ready to join an ACO?

Latest news

Aug. 25: CMS released quality and performance results showing Medicare ACOs continue to improve quality of care while saving money. Get more detailed quality and financial results.

Related Dermatology World articles

ACO participation: Whether to join one and how to choose a good match
Broad legal waivers enable physician ACO participation
ACOs: Myths and fables debunked
ACOs seek to incentive culture of quality, efficiency

Questions? Contact the Academy's Government Affairs team at (202) 842-3555 or