Medicare Savings Might Be Costing Us: Here’s Why

In 2010, as part of the Affordable Care Act, Medicare invited healthcare providers to form accountable care organizations, aka ACOs. The idea was simple: shift away from fee for service by holding providers accountable for the cost and quality of medical care. Those providers that reduce healthcare utilization while maintaining high quality would be eligible for financial rewards.

In some parts of the country, lots of providers responded to this invitation. Sometimes, large provider organizations—ones that already included primary care and specialty clinicians, hospitals and skilled nursing facilities—leveraged their preexisting partnerships to form ACOs. Other times, provider organizations banded together—outpatient practices merging with hospitals. In theory, ACOs were supposed to save money by better coordinating patient care, and by achieving organizational efficiencies.

Could ACOs be costing us money?

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