An Accountable Care Organization (ACO) is a healthcare delivery entity that marks the centerpiece of the Patient Protection and Affordable Care Act (PPACA). It is a new Medicare payment model that could expand to Medicaid and private payors under provisions contained in the PPACA. Rehab professionals working in all types of rehab settings (i.e. acute inpatient units, sub-acute units, skilled nursing facilities, or SNFs, inpatient rehab facilities, or IRFs, long-term acute care centers, or LTACs, home health agencies, and outpatient therapy clinics, both private practices and hospital-based) will be a part of future ACOs.

The categories and bullet points below are laid out to provide a general understanding of the ACO healthcare delivery system concepts relevant to rehab services. The bolded portions are intended to identify areas of significant importance to rehab directors and innovators.


  • Is formed or “sponsored” by certain types of healthcare providers. These include physicians, hospitals, networks of individual practices, partnerships, joint ventures between physicians and hospitals, and critical access hospitals. Therapists cannot sponsor an ACO; however, eventually most of them will be working with one or more ACOs involving all types of rehab settings.

  • Consists of integrated providers that are jointly held accountable for achieving measured quality improvements in care and reductions in the rate of spending growth for a defined patient population.

  • Is about making the population healthier so the costs associated with providing primary, chronic, and acute care can stabilize – and, in an ideal situation, decline over time.

  • Fosters quality through the greater clinical integration of care across healthcare settings, greater financial efficiency,andincreased transparency and information about the processes, costs, and outcomes of healthcare (i.e. therapy).

  • Participates in the “Medicare Shared Savings Program,” which encourages investment in health information technology (HIT) and redesigned care processes for high-quality and efficient service deliveryaimed at reducing costs and improving health outcomes. HIT enables real-time communication that is essential to the coordination of clinical practice and resource utilization.

  • Is motivated to provide coordinated inter-professional care and have a strong financial incentive to provide high-quality care across the continuum.

  • Will tend to favor less expensive proven therapy over more costly interventions such as surgery.

  • Will invest in innovations and services that were previously under-reimbursed or not reimbursed at all, such as prevention and wellness programs, and develop population-specific outreach campaigns to promote healthy lifestyles, appropriate self-care, and preventive care.

Each ACO has to:

  • Be willing to become accountable for the quality, cost, and overall care of a defined population of Medicare fee-for-service beneficiaries through provider networks responsible for providing high-quality care across the continuum of services.

  • Have a network of providers that includes enough primary care professionals and other providers (including therapists in every setting) to cover the Medicare beneficiaries assigned to it.

  • Define processes to promote evidence-based medicine and patient engagement. The law requires that these quality metrics include measuring clinical processes and outcomes for patient and caregiver experience of care, utilization rates, and patient-centered processes.

  • Implement a number of internal systems and technologies that hold enormous potential for public health, such as data transparency agreements, common cost and quality metrics, sufficient HIT systems, and the capability to manage health data of entire populations.

  • Share their performance data on quality measures being used to assess performance. The use of data within and outside of each organization will be critical for the purposes of quality improvement.

  • Accept common cost and quality metrics that Medicare (and in the future, private payors) will use to determine whether each ACO has in fact met its targets for improved quality and reduced cost, thus qualifying for a portion of the savings generated. This capability allows for apples-to-apples comparisons that can facilitate the sharing of best practices as well as the collection of accurate performance improvement data. Data reporting to clinical registries and participation in health information exchanges are likely to become requirements of ACO certification to better link in the population.

Steps for rehab directors, innovators and clinics to become attractive to ACOs:

  • Increase the use of standardized and widely accepted functional assessments to establish a deep and valid record of outcomes by diagnostic groups or populations for your clinic and therapists. Therapy departments should develop their capacity for both measuring and marketing their outcomes and associated costs to ACOs.

  • Therapists who are hospital employees need to understand and make a case for the value of their work through consistent outcome reporting, starting as soon as possible. Make your department attractive by showing how your patients have benefited from your care through outcomes and documentation that convey medical necessity. Demonstrate how your costs are lower and quality is improved.

  • Use a “provider report card” in demonstrating performance; this is an approach that will fit well into the outcome measurements required of ACOs.

  • Physicians already are involved in “pay for performance” arrangements, and therapists can expect the same in the near future.

  • Outpatient therapy clinics are starting to market themselves in terms of outcomes, sharing their own results and providing comparisons with other providers.

About the Author

Gerry Stone, PT, M.Ed., is a physical therapist of 40 years and the founder and chief clinical officer of The Rehab Documentation Company, Inc., the makers of ReDoc Software. He served on the Neuro-Muscular panel of the American Physical Therapy Association to help to write The Guide to Physical Therapist Practice, Volume 1, (1995-1997). He has extensive experience with and knowledge of CMS and TJC regulations and reimbursement structures pertaining to rehab.

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