Healthcare Data GlossaryPayer
ACO: Definition and Healthcare Context
Full name: Accountable Care Organization
An Accountable Care Organization (ACO) is a group of doctors, hospitals, and other health care providers who voluntarily coordinate care for Medicare beneficiaries with the goal of delivering high-quality, efficient care. ACOs accept accountability for total cost and quality of care for an attributed patient population. Under the Medicare Shared Savings Program (MSSP), ACOs that reduce spending below a benchmark while meeting quality thresholds share in the savings. CMS administers multiple ACO models; in 2024, ACOs served over 11 million Medicare beneficiaries.
Last updated: 2026-06-17Reviewed by: Dr. Jennifer Montecillo, MD — Gullas College of Medicine, 2019. Non-practicing medical reviewer.
How it’s used
- CMS QPP MIPS: clinicians who participate in Advanced APMs — including some ACO models — may qualify for the 5% APM incentive payment as an alternative to MIPS.
- Medicare Shared Savings Program (MSSP): CMS publishes annual MSSP ACO participation and financial-performance data, which Fonteum analyzes in its ACO concentration research.
- CMS PECOS and Provider of Services files: ACO participant TINs and NPIs are drawn from CMS enrollment data, the identity backbone Fonteum uses to attribute clinicians to their ACOs.
Frequently asked questions
- What is an ACO?
- An ACO (Accountable Care Organization) is a network of providers that collectively accepts responsibility for the cost and quality of care for an attributed Medicare patient population.
- How do ACOs save Medicare money?
- ACOs receive a financial share of savings they generate below a cost benchmark, incentivizing coordinated care that reduces unnecessary hospitalizations and duplicative services.
- What is the Medicare Shared Savings Program?
- The Medicare Shared Savings Program (MSSP) is CMS's primary ACO track, allowing provider groups to enter shared savings and risk arrangements.