College of American Pathologists
Accountable Care Organizations


2012 marked the launch of the health care reform law’s Medicare Shared Savings Program (MSSP), which offers health care providers financial incentives in the form of shared savings to work together at the local level to measurably improve Medicare patient outcomes and reduce delivery costs for specific patient populations through collaborative, or accountable care. The law and proposed regulations call for the establishment of Accountable Care Organizations (ACOs) to coordinate medical care for no less than 5,000 Medicare patients per provider organization, contract with providers (and possibly private payers), report on dozens of quality measures established by CMS, and show savings in order to reap financial gains from the program.

Pioneering ACOs

The 32 Pioneer ACOs including the leading health care systems:
  • Dartmouth-Hitchcock ACO
    (New Hampshire and Eastern Vermont)
  • Fairview Health Systems
    (Minneapolis, MN Metropolitan Area)
  • Monarch Healthcare
    (Orange County, California)
  • Park Nicollet Health Services
    (Minneapolis, Minnesota Metropolitan Area)
  • Partners Healthcare
    (Eastern Massachusetts)Presbyterian Healthcare Services (Central New Mexico)

By the summer of 2012, there were 116 ACOs under the Medicare Shared Savings Program. But it’s really the private sector driving the coast-to-coast growth of coordinated care. There are now an estimated 150 commercial ACOs across the country, estimates the Brookings-Dartmouth ACO Network, whose members include the College. Unencumbered by regulatory constraints, these partnerships between private insurers and facilities are taking the lead in shaping how ACOs operate. This includes defining performance measures used by providers to demonstrate quality and cost savings.

The Pioneer Model

Of the 116 participating in the MSSP, there are currently 32 participating in the Pioneer Model. These entities are already providing coordinated care for patients, often in conjunction with private payers. In fact, this model is designed to work in coordination with private insurers to align provider incentives while improving health outcomes and achieving cost savings across the system. The payment model for Pioneer ACOs is flexible, allowing accommodation of specific organizational and market conditions. It also allows providers to move more rapidly from a shared savings payment model to a population-based payment model on a track consistent with, but separate from, the MSSP.

Five Basic Tenets of Accountable/Collaborative Care Today

  1. ACOs are legal entities serving a local Medicare population of 5000+ patients
  2. ACOs require physician involvement in their formulation and management, and pathologists in particular are vital to achieving goals of cost savings and quality improvement
  3. Clinical laboratory and anatomic pathology services are critical components of ACOs
  4. ACOs will establish new outcomes reporting requirements, much of it based on laboratory data
  5. Now is the time for pathologists to assess their local health care markets and determine where and how they will participate

Specifically, during the first two years of the Pioneer model features a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the Shared Savings Program. These shared savings would be determined through comparisons against an ACO’s benchmark, which is based on previous CMS expenditures for the group of patients aligned to the Pioneer ACO. In year three of the program, those Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model. Population-based payment is a per-beneficiary per month payment amount intended to replace some or all of the ACO’s fee-for-service (FFS) payments with a prospective monthly payment.

Advanced Payment Initiative

When the CMS issued the proposed ACO rule in March 2011, many health care providers and stakeholders with limited financial resources were concerned about their ability to invest in the infrastructure and staff development necessary to participate in the MSSP.

Four Facts to Know Before Getting Started

  1. Commercial ACOs—partnerships between health care entities and private payers—are advancing at a fast pace. ACOs under the Medicare Shared Savings Program (MSSP) launched in April and July.
  2. Even with the MSSP program now underway, many ACOs are in the early stages of formation, there is still time for pathologists to get involved.
  3. Don’t wait to be invited...establish yourself as a leader in the clinical community; determine which physicians you want to work with (from pathology, other specialties and primary care)—and initiate an ACO conversation with them.
  4. CAP has prepared a slide deck, “Pathologists’ Role in Coordinated Care and Managing Patient Populations”, to assist pathologists in presentations about the role medical laboratories have in coordinated and accountable care.

In response, CMS introduced the Advanced Payment Model, which is focused on assisting smaller ACOs with less access to capital participate in the MSSP. Through this initiative, selected organizations will receive an advance on the shared savings they are expected to earn. Participating ACOs will receive three types of payments, according to CMS:

  • An upfront, fixed payment: Each ACO will receive a fixed payment.
  • An upfront, variable payment: Each ACO will receive a payment based on the number of its historically-assigned beneficiaries.
  • A monthly payment of varying amount depending on the size of the ACO: Each ACO will receive a monthly payment based on the number of its historically-assigned beneficiaries.

Advance payments are structured in this manner to acknowledge that new ACOs will have both fixed and variable start-up costs.

CAP ACO/Coordinated Care Resource Center

The College has launched an online CAP ACO/Coordinated Care Resource Center to provide members access to the latest news and regulatory updates on coordinated care with a focus on how these developments impact pathology. The College also supports the CAP ACO Network. Launched in 2011, this Network is for CAP members currently participating—or who will participate—in collaborative or accountable care organizations in their communities. Join the CAP ACO Network today.


Interested in joining the CAP-ACO network? CAP members who work in a facility that is currently—or will be—part of an ACO are encouraged to join the network.

For more information—or if you have a question about ACOs—please email us.