Chronic Care Coordination, Accountable Care Organizations, and Medical Homes


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 2012, over 70 percent of adults age 45 and older had at least one of ten selected chronic conditions, and about 20 percent had three or more chronic conditions.

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

A key objective in chronic-care management is to monitor treatment and coordinate care provided by multiple practitioners to ensure 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 safeguard their health by practicing 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 to recover from setbacks. 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 on daily activities, and a low level of engagement in their care. Transitional care models assign a transitional care manager, such as a nurse or other trained health professional, to coordinate and monitor care and to provide patient and caregiver education and support.

The Centers for Medicare & Medicaid Services (CMS) has sponsored many chronic-care demonstrations to explore ways to improve care coordination without increasing costs. These projects have targeted certain conditions such as congestive heart failure, diabetes, and emphysema. They have used different approaches such as care management, disease management, and “medical homes” (see discussion below). 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—in MA plans and traditional Medicare. 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—growing evidence 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 providing care for a population of patients. 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. Many private insurance companies are testing ACO programs, using a variety of payment designs. These include “shared savings” models in which 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 ACO may also be at risk for costs above specified levels.

Medicare has also established several ACO programs in traditional Medicare. Medicare beneficiaries who receive care from an ACO provider may also obtain Medicare-covered services from providers who are not affiliated with the ACO.

A national survey from May 2013 indicates that about 24 percent of physician practices have joined an ACO. Certain factors appear to influence whether physicians participate in an ACO, such as practice size, ownership, and whether practices use care management processes.

Many questions remain about the most appropriate ways to ensure that ACOs provide high-quality services at a reduced cost. Some analysts believe that ACOs 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 the savings from ACOs’ greater efficiency.

Possible responses that address this concern include stronger antitrust regulation and enforcement, implementation of all-payer rate systems, effective monitoring of quality metrics, and proper oversight. (See this chapter’s section Keeping Health Care Spending on a Sustainable Path—Antitrust.)

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, alternatively, 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 period of 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 aspatient-centered medical homes—are a team-based health care delivery model, led by a health care provider, the purpose of which is to provide comprehensive, coordinated, and cost-effective care to optimize 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.

Chronic Care Coordination, Accountable Care Organizations, and Medical Homes: Policy

Quality of care for Medicaid and Medicare beneficiaries

In this policy: FederalLocalState

AARP supports systems and strategies that help people of all ages maximize function, independence, and well-being, and adapt to changes as their medical conditions and needs change. To this end AARP supports policies that will lead to improvement of the quality of care for people with chronic conditions.

Congress and the states should finance and support evidence-based models, as well as demonstration and pilot projects for delivery models to identify those most effective in serving people with multiple chronic conditions.

Congress should authorize and CMS 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 activation through appropriate education and self-management programs and improved patient-provider communication.

Quality care for chronic illness

In this policy: FederalState

AARP supports Medicare and Medicaid policies that result in the efficient delivery of optimal care for beneficiaries with chronic illness and disabling conditions, including approaches that encourage:

  • 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 (for more on adequate training of health professionals, see this chapter’s section Health Care Workforce and Education);
  • 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;
  • 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;
  • support to family caregivers to help them partner effectively with professionals;
  • 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 this chapter’s section Health Care Workforce and Education).

Integrating health and long-term care

In this policy: FederalState

AARP supports developing comprehensive, coordinated approaches to financing and delivering a wide range of needed care to beneficiaries with chronic conditions. Medicare and Medicaid should facilitate joint funding streams and integration of health and long-term care services for beneficiaries who are dually eligible for both programs.

The federal government should strengthen the incentives for ACOs to coordinate with LTSS providers so that ACOs meet the full range of individual health and LTSS needs.

Lifting budget-neutrality requirements

In this policy: FederalState

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. A long-term, multiyear timeframe should be applied when determining the budget impact of these demonstrations.

Beneficiary protections

In this policy: FederalState

Chronic-care coordination programs and medical homes in Medicare should include the following beneficiary protections:

  • Beneficiary and provider participation should be voluntary, should entail no additional cost to beneficiaries, and should not affect access to other Medicare benefits.
  • Patients should receive complete information about the program’s objectives, roles, and responsibilities for patients and clinicians; 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 in order to facilitate care coordination.
  • Medicare and Medicaid beneficiaries must be permitted to opt out of participation if they are automatically enrolled in chronic-care programs, ACOs, or medical homes.
  • 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.


In this policy: FederalState

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

  • rigorous trials and 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

In this policy: FederalState

A medical home should include voluntary patient selection of a primary provider or medical practice and should maintain an individual’s ability to change primary providers or medical homes. Medical homes should have the following attributes:

  • ease of patient access and communication, including during nonbusiness hours;
  • 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;
  • care management, preferably employing an interdisciplinary team approach, especially for patients with multiple chronic conditions;
  • education and training for patients and their family caregivers in support of patient self-management and consumer engagement; and
  • 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.

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

Accountable care organiations (ACOs)

In this policy: FederalState

AARP supports testing by Medicare of multiple forms of ACOs to determine which models achieve improved quality and reduced costs.

AARP strongly favors requirements that assign Medicare patients prior to the period for which ACOs will be held accountable, the “performance period.”

If Medicare relies on attribution-based beneficiary assignment to ACOs, 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 and 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;
  • ability to coordinate services across the continuum of care and care settings;
  • 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 this chapter’s section Reforming the Delivery of Health Care Services—Health Information Technology), and to use technology to support clinical operations and patient-centered functions (e.g., through email and tele-health)—in accordance with the provisions of the Health Information Technology for Economic and Clinical Health (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;
  • capability to measure and report performance, based on quality and cost (resource use); and
  • demonstrated ability to improve quality, including establishment of performance goals and targets and collection of 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.