Chronic Care Coordination and Accountable Care Organizations


A chronic condition or illness is one that is likely to last more than one year, requires ongoing medical attention, and can limit a person’s daily activities. Arthritis, emphysema, cancer, cardiovascular disease, depression, diabetes, and obesity are among the most prevalent chronic conditions in older adults. The number of older people with chronic diseases and conditions is large and growing. In 2014, about 60 percent of adults age 18 and older had at least one chronic condition. About 28 percent had three or more chronic conditions.

Managing chronic conditions is costly for patients and payers. Despite some progress, there are large deficiencies in the delivery and quality of health care for chronic illness. Addressing the poor quality of treatment for chronic conditions and its high cost is a compelling need.

Monitoring treatment and coordinating care provided by multiple practitioners is key to chronic-care management. This ensures that patients receive timely, appropriate care while also avoiding unnecessary duplication of services and preventing medical errors. For some patients with multiple chronic conditions, meeting this objective requires a full range of medical and social support services.

Monitoring and coordination can increase quality and reduce health care costs by ensuring that patients receive recommended services when needed, avoid duplication of services, have providers who monitor their medications, and receive information to help them manage their conditions without exacerbating them.

Beneficiaries can help maintain and improve their health through healthy behaviors. Those with chronic conditions can learn to manage them by taking recommended preventive measures to avoid the onset or exacerbation of illness and recover from setbacks. Most patients will need assistance to manage their conditions and pursue healthy behaviors. Such assistance can be provided by medical homes. In Traditional Medicare, numerous barriers hamper widespread, sustained improvements in caring for people with chronic conditions. These include:

  • failure to value team-based primary care;
  • fragmentation of care delivery and poor transitions across settings;
  • misaligned fee-for-service payment incentives that do not value service integration;
  • lack of interoperable electronic health information systems, which makes it difficult for providers to monitor patient progress, share information, and track patients over time; and
  • inadequate medication management that can lead to increases in preventable drug-related problems.

Addressing these barriers requires multiple interventions aimed at providers, patients, and family caregivers, such as coordinated care, self-care management, and transitional care.

Coordinated care interventions include self-management by patients, ongoing monitoring of a person’s health and long-term care needs, and systems to ensure smooth transitions among care settings and providers. Coordinated care programs typically involve support for patients, medication management, improved communication, and coordination among providers.

Self-care management interventions include activities that provide patients (and their caregivers, when indicated) with information and strategies to manage and coordinate their care to improve their quality of life, increase functioning and independence, make more efficient use of health services, and help to lower costs.

Transitional care interventions reduce problems that occur when patients move from one setting to another. Those with chronic conditions are vulnerable if health care facilities and clinicians fail to plan for transitions by not providing follow-up services. Patients at risk for difficult transitions—such as those from hospital to home or nursing facility—include people who have five or more chronic conditions, a need for numerous office visits, poor health status, limitations in daily activities, or a low level of engagement in their care. Transitional care models assign a transitional care manager to coordinate and monitor care as well as provide patient and caregiver education and support. A care manager can be a nurse or other trained health professional.

The Centers for Medicare & Medicaid Services (CMS) has sponsored many chronic-care demonstrations to explore ways to improve care coordination without increasing costs. They have used different approaches such as care management, disease management, and medical homes. The ACA expands the number and type of Medicare projects that test ways to coordinate care and ensure smooth transitions for beneficiaries—including those with chronic conditions. These projects include:

  • the Medicare Community-Based Care Transitions Program;
  • the Medicare Independence at Home Demonstration;
  • using community health teams to support medical homes, regardless of payer type; and
  • implementation of incentives to reduce Medicare hospital readmissions.

Several states are also implementing various approaches to improving chronic-care coordination.

Emerging models of service delivery: Research indicates that the integration of service-delivery systems and the coordination of services can lead to more effective—and more efficiently delivered—health care than that provided by the current fragmented delivery system. Integrated systems employ a range of techniques to achieve these positive results, including the provision of decision support tools to clinicians, the use of team-based care, and activities that encourage patient engagement.

An accountable care organization (ACO) is a payment and service-delivery model in which groups of physicians, hospitals, and other health care providers take responsibility for the cost and quality of care provided to a patient population. Many private insurance companies have implemented these programs, using a variety of payment designs. The Traditional Medicare program has also established several ACO programs. Medicare beneficiaries who receive care from an ACO provider may also obtain Medicare-covered services from providers not affiliated with the ACO.

ACOs are characterized by a payment model that typically ties payment to performance on quality measures and includes financial incentives to constrain the total cost of care for an assigned population of patients. Some examples include shared-savings models. The ACO receives a financial reward if the total amount the insurer pays for services for the covered population during a year is below a specified target amount. Depending on the model, the organization may also be at risk for costs above specified levels.

Many questions remain about the most appropriate ways to ensure that these organizations provide high-quality services at a reduced cost. Some analysts believe they may exacerbate a growing trend toward consolidation among provider groups, which can potentially lead to higher prices for medical services by reducing competition and, in turn, generating higher costs for private and public insurers. Higher costs could negate potential savings from ACOs’ gains in efficiency.

Possible responses that address this concern include stronger antitrust regulation and enforcement, effective monitoring of quality metrics, and proper oversight (see also Antitrust in Health Care).

To be successful, ACOs must demonstrate their commitment to high-quality patient experience and reduced costs. A major issue with regard to ACOs is how patients would participate in one and whether they should be informed of their physician’s decision to join one. Some analysts believe that Medicare beneficiaries should be prospectively assigned to an ACO based on historical claims data about their past receipt of services from a given physician. In a voluntary scenario, a beneficiary would be informed of his or her assignment and could decide to remain with the provider/ACO or select another physician outside of the ACO. Others propose that patients should be retrospectively assigned to ACOs, as determined by their service use during the time corresponding to the payment period. However, in this last scenario, beneficiaries would not be informed about the delivery system in which they were receiving care.

Medical homes—also known as patient-centered medical homes—are team-based primary care practices that provide comprehensive, coordinated, and cost-effective care with the goal of optimizing patients’ health outcomes. Medical homes adopt a “whole person” approach to improving care through enhanced access, coordination, and support for patient self-management that is culturally appropriate, interactive, and respectful.

To date, research evidence is lacking as to whether medical homes consistently improve outcomes and lower costs and, if so, which specific features bring about these changes.



Quality of care for Medicaid and Medicare beneficiaries

Systems and strategies that help people of all ages maximize function, independence, and well-being should be supported. They should adapt to changes as their medical conditions and needs change. Policies should be designed to improve the quality of care for people with chronic conditions.

Congress and the states should support evidence-based models for service delivery, as well as demonstration and pilot projects. They should identify models most effective in serving Medicare beneficiaries, including people with multiple chronic conditions.

Congress should authorize, and the Centers for Medicare & Medicaid Services should implement payment incentives, public reporting of provider and institutional performance, and other approaches that encourage:

  • coordination of care to ensure effective transitions across care settings; and
  • patient and caregiver involvement through appropriate education, self-management programs, and improved patient-provider communication.

Quality care for chronic illness

Medicare and Medicaid policies should result in the efficient delivery of optimal care for beneficiaries with chronic illness and disabling conditions.

These policies should encourage best practices, including:

  • appropriate use of evidence-based interventions;
  • interdisciplinary care teams composed of health and long-term services and supports (LTSS) professionals and others to support the needs of each patient and their family caregivers (see also Health Care Workforce Financing, Education, and Training for more on adequate training of health professionals);
  • periodic assessment of a patient’s clinical needs (grounded in evidence-based protocols when available) and assessment of social and support needs and resources of both patient and family caregivers as needed;
  • appropriate use and timely monitoring and reconciliation of medications; and
  • support to family caregivers to help them partner effectively with professionals.

Additional best practices should include:

  • greater affordability of medications;
  • accelerated adoption of health information technology that contributes to improved care;
  • rapid dissemination of information and adoption of effective, evidence-based chronic-care interventions;
  • greater emphasis on chronic-care coordination and management in clinical education and continuing education of health care professionals; and
  • effective use of the health care workforce (see Health Care Workforce Financing, Education, and Training).

Integrated financing for the delivery of health and LTSS

Medicare and Medicaid should facilitate joint funding streams to enable the coordinated delivery of health services and LTSS for beneficiaries enrolled in both programs.

The federal government should strengthen the incentives for accountable care organizations to coordinate with LTSS providers.

Budget-neutrality requirements

Budget-neutrality requirements should be eliminated for current and future Medicare and Medicaid demonstrations regarding care coordination and medical homes for beneficiaries with chronic conditions. Instead, a long-term, multiyear timeframe should be applied when determining the budget impact of these demonstrations.

Beneficiary protections

Beneficiary and provider participation in chronic-care coordination programs and medical homes should be voluntary, should entail no additional cost to beneficiaries, and should not affect access to other Medicare benefits.

Medicare and Medicaid beneficiaries must be permitted to opt out of participation if they are automatically enrolled in chronic-care programs, accountable care organizations (ACOs), or medical homes.

Chronic-care coordination programs and medical homes in Medicare should include strong beneficiary protections.

Patients should receive complete information about the program’s objectives, roles, and responsibilities for patients and clinicians. They should know how and where to receive services, which services are beyond the scope of the program, and how to obtain such services.

Physicians, other practitioners, and providers currently providing care should be made aware of beneficiary participation in these programs to facilitate care coordination.

Beneficiary access to other providers should not be restricted. Beneficiary privacy must be protected.

Protections for patients with disabilities, particularly cognitive impairments, should be explicitly addressed.


Chronic-care programs should be permitted to include the following:

  • rigorous evaluations of demonstrations and pilot programs that focus on coordinated care services, and
  • various levels of incentives, including nominal financial and other incentives, to encourage enrollment and participation. Incentives should be permitted to vary for different target populations.

Medical homes

A medical home should include voluntary patient selection of a primary provider or medical practice. It should maintain an individual’s ability to change primary providers or medical homes.

In advance of receiving care from a medical home, patients should receive information about their rights and responsibilities as medical-home patients.

Medical homes should have the following attributes:

  • They should promote ease of patient and caregiver access and communication, including during nonbusiness hours.
  • There should be a periodic assessment of a patient’s clinical needs (grounded in evidence-based protocols when available, and assessment of social and support needs and resources of both patient and family caregivers as needed).
  • There should be a focus on care management should preferably employ an interdisciplinary team approach, especially for patients with multiple chronic conditions.
  • Education and training for patients and their family caregivers should be provided in support of patient self-management and consumer engagement.
  • They should have the capacity to use data to identify patients with specified conditions and risk factors, compile patient registries, track referrals and test results, and follow up with other providers, including community resources.

Preferred approaches rely on health information technology such as interoperable electronic medical records and electronic prescribing.

Accountable Care Organizations

Medicare should continue to test multiple types of ACOs to determine which models achieve improved quality and reduced costs.

Medicare patients should be assigned prior to the period (the “performance period”) for which ACOs will be held responsible.

If Medicare relies on attribution-based beneficiary assignment to ACOs, the Centers for Medicare & Medicaid Services (CMS) should allow for voluntary attestation by beneficiaries that they receive care from a participating ACO provider.

Full disclosure about the provider’s participation in the ACO and the impact of such participation on patients must occur to ensure that patients understand and can actively engage in their care.

CMS must ensure transparency of information on quality and cost.

Participation in an ACO by beneficiaries of Medicaid and Traditional Medicare should be voluntary. It should not affect access to other Medicare providers, physicians, or practitioners.

ACOs should be required to meet qualifying criteria identified and enforced by a regulatory body. If the regulatory body wishes to deem the accreditation standards of a private accrediting body, the standards must be at least as rigorous as those established by a state or federal regulator.

An ACO must have:

  • a formal legal structure to allow the organization to receive and distribute payments, a mechanism for governance, and a governing body that includes consumers;
  • the capacity to manage risk and resources to ensure accountability;
  • an adequate provider network, including a strong foundation in primary care that can function as a medical home;
  • the ability to coordinate services across the continuum of care and care settings;
  • the ability to meet the requirements of (at least) stage one of federal “meaningful use” regulations to demonstrate that use of health information technology improves care (see Health Information Technology), and to use technology to support clinical operations and patient-centered functions (e.g., through email and telehealth) in accordance with the provisions of the Health Information Technology for Economic and Clinical Health (commonly known as HITECH) Act of 2009, in order to be eligible for financial assistance to purchase electronic medical records, eligible physicians and hospitals must demonstrate “meaningful use” of technology to achieve significant improvements in care;
  • the capability to measure and report performance, based on quality and cost (resource use); and
  • a demonstrated ability to improve quality, including establishing performance goals and targets and collecting data to support improved care.

ACOs must collect and report performance data on clinical effectiveness and patient experience.

Aggregate cost-sharing charges in an ACO should not exceed those in Traditional Medicare.