IRMI Main Logo


Home > Glossary

Accountable Care Organization

Accountable Care Organization (ACO)

Definition

A type of organization created by the Patient Protection and Affordable Care Act (PPACA). ACOs offer financial incentives for healthcare providers to band together to better coordinate services for groups of patients and thereby improve the quality of care, all while lowering costs. Another focus of ACOs is to promote a reduction in hospital readmission rates for certain conditions, such as heart attack/heart failure and pneumonia.

ACOs can include primary care physicians, specialist physicians, hospitals, or other types of healthcare providers. Under the provisions of the ACA that created ACOs, if an ACO achieves certain quality targets, the resulting savings are divided between the various providers who are part of the ACO.

Links for IRMI Online Subscribers Only: PLI XXII

Related Terms

Patient Protection and Affordable Care Act (PPACA)

A 2010 law that enacted the most significant regulatory overhaul of the American healthcare system since passage of Medicare and Medicaid in 1965. It is also referred to as the Affordable Care Act (ACA) or as "Obamacare."

Following are the highlights of the PPACA.

  • Health insurance market reforms: Among the reforms include: (1) health insurance policies are barred from having annual or lifetime coverage limits; (2) insurers must cover all applicants, with new minimum policy standards, and offer the same rates regardless of preexisting conditions or gender; (3) those with preexisting conditions cannot be denied coverage; (4) health insurers may not drop insureds who develop a medical condition; (5) parents with children up to the age of 26 can cover them under their own policies.
  • Individual mandate: Everyone in the United States must purchase health insurance or pay a penalty to the Internal Revenue Service (IRS) on their income tax return. Exemptions will be granted for financial hardship, religious objections, American Indians, prison inmates, those without coverage for less than 3 months, undocumented immigrants, people with incomes below certain tax filing thresholds (currently $9,500 for individuals and $19,000 for married couples), and those for whom the lowest cost plan option exceeds 8 percent of household income.
  • Medicaid expansion: As of 2013, every state has different Medicaid eligibility requirements based on income, age, gender, dependents, and other specific requirements. Starting in 2014, states have the option, but not the obligation, to expand Medicaid eligibility levels to 138 percent of the federal poverty level (FPL). The expansion covers the gap for those who earn too much to qualify for Medicaid but not enough to qualify for subsidies available under the individual mandate.
  • Insurance exchanges: Directs states to establish insurance exchanges where individuals and small businesses can compare various insurers' healthcare plans, band together to form larger purchasing groups, and obtain coverage at more affordable rates. In states that choose not to establish such exchanges, the federal government will do so.
  • Premium subsidies: Provides sliding-scale subsidies that reduce the cost of coverage. To be eligible for a premium subsidy, household income must be between 100 percent and 400 percent of the FPL. (Below 100 percent of FPL, the household qualifies for Medicaid. Above 400 percent of FPL, subsidies are no longer available.)
  • Large employer mandate: Requires employers with more than 50 full-time employees to offer "affordable" coverage to their workforce or pay an annual penalty to the IRS. "Full-time" employees are defined as working 30 hours or more per week (which means the law does not apply to part-time workers). The amount of the penalty depends on whether the employer does or does not offer coverage and whether any of the employees receive a premium credit for purchasing individual or family coverage on a state-based exchange.
  • Small employer subsidies: Offers a modest tax credit to small employers to help defray some of the cost of purchasing health insurance for their employees. To be eligible, a small business must meet the following criteria: (1) 25 full-time employees or fewer (meaning tax credit subsidies are unavailable for companies with between 26 and 50 employees); (2) average annual wage less than $50,000; and (3) employer contributes at least 50 percent to the premium cost.

Related Products

D&O MAPS

Your comprehensive resource for directors and officers liability exposures and coverage. Easily compare the leading insurers’ policies with detailed analyses of more than 250 D&O forms. Includes the D&O policy explorer. Learn More

Professional Liability Insurance

Your one-stop shop for information about D&O, EPL, Professional liability, and more. The policy analyses and comparisons will help you determine which policies are best, and design the broadest coverage. Learn More

Employment Practices Liability Consultant

Provides the tools you need to develop leading-edge risk management and insurance solutions for these daunting loss exposures. Learn More

The Betterley Report - Cyber and Privacy Insurance

Cyber/Privacy Insurance—This report covers liability for data breaches in which a customer's personal information, such as credit card numbers, is exposed or stolen by a hacker (or other criminal) who has gained access to the firm's electronic network. Learn More

The Betterley Report - Employment Practices Liability

Employment Practices Liability Insurance—This report covers liability arising from the employment process, including: wrongful termination, discrimination, sexual harassment, retaliation, and miscellaneous inappropriate workplace conduct, such as defamation, invasion of privacy, and failure to promote. Learn More

The Betterley Report - Intellectual Property and Media Liability

Intellectual Property and Media Liability Insurance—This report covers the following legal expenses incurred by a business: to defend against lawsuits alleging that it has infringed on a patent, trademark, or copyright; and to pay such costs when its own intellectual property has been infringed upon and must enforce its rights Learn More

The Betterley Report - Private Company Management Liability

Private Company Management Liability Insurance—This is a form of errors and omissions coverage for a privately-held company. It is designed to cover not only directors and officers, but also managers and employees, when they incur liability while performing their duties for the organization. Learn More

The Betterley Report - Technology Errors & Omissions

Technology Errors & Omissions Insurance—This report covers liability incurred by providers of technology services or products, such as data storage companies and website designers. The policies most frequently cover liability for data breaches and other losses not involving bodily injury or property damage. Learn More

Risk & Insurance Package

This is THE reference package for any risk or insurance professional who works in specialty lines. Learn More

The Betterley Report - Cyber 3 Pack

Detailed evaluations of three specialty insurance products: Cyber/Privacy Insurance, Technology Errors & Omissions Insurance, and Cyber Insurance for Healthcare. Learn More

The Betterley Report - Management 3 Pack

Detailed evaluations of three specialty insurance products: Employment Practices Liability Insurance, Private Company Management Liability Insurance, and Intellectual Property and Media Liability Insurance. Learn More

The Betterley Report - 6 Pack

Detailed evaluations of six specialty insurance products: Cyber/Privacy/Media Liability Insurance, Employment Practices Liability Insurance, Cyber Insurance for Healthcare, Private Company Management Liability Insurance, Intellectual Property and Media Liability Insurance, and Technology Errors & Omissions Insurance. Learn More

The Betterley Report—Cyber Insurance for Healthcare

This report provides an overview of the market conditions and coverage trends related to cyber and privacy insurance for healthcare organizations. Readers will not only better understand the cyber exposures faced by healthcare organizations, but they will also be provided with incomparably detailed side-by-side comparisons of the leading insurers writing coverage for this segment. Learn More

Social Media
User ID: Subscriber Status:Free