Accountable Care Organization (ACO)

Medicare eases up on accountable care rules

Surgeons prepare an operating room for a patient.
Doctors prepare an operating room. Photo: Arne Dedert/picture alliance via Getty Images

The Trump administration on Friday eased up on groups of hospitals and doctors called "accountable care organizations," which were created by the Affordable Care Act, in a regulation that will allow those companies to retain more money if they hold Medicare costs down and keep patient quality high.

The bottom line: The agency that oversees Medicare is still requiring these networks to take on more financial risk. But it's now backpedaling from some of the proposed rules, and as a result, it expects fewer hospitals and doctors to leave the program.

Accountable care organizations saved Medicare money in 2017

A nurse assistant treats a patient in a health center office.
A patient gets treated in a health center. Photo: Dominick Reuter/AFP via Getty Images

The Centers for Medicare & Medicaid Services has released new data on accountable care organizations that, on a high level, show the networks of hospitals and doctors saved Medicare money in 2017 and scored high quality marks.

The bottom line: ACOs have reduced federal health care spending more than what skeptics expected. But there are still questions of whether ACOs could have reduced Medicare spending even more if hospitals and doctors were on the hook for paying back losses sooner and if there is a limit to how much they could really save in the future.