How do ACOs differ from HMOs?

Health maintenance organizations (HMOs) are insurance programs that provide health care to a defined population for a fixed price.

ACOs and HMOs both rely on the creation of physician networks, promotion of member health and resource management to control costs. And, like HMOs, Pioneer ACOs will move to capitation payments in their third year of implementation.

However, important differences do exist between ACOs and HMOs. ACOs are not insurance companies and their providers will be financially rewarded for coordinating all aspects of patient care. Primary care providers will need to increase their reliance on nurse practitioners, pharmacists and other members of the health care team to track appointment compliance, manage medication schedules and oversee lifestyle changes.

ACO patients can be seen by any physician of their choice. Patient participation in ACOs is strictly voluntary, there are no enrollment or lock in provisions. Patients who are unhappy with their care are free to seek treatment elsewhere. Consistent with traditional Medicare rules, there are no gate keeping or pre-authorization provisions in the ACO model and patients aren’t required to obtain a referral before consulting with another provider.

How do ACOs align with Patient Centered Medical Homes (PCMH)?

The Patient Centered Medical Home (PCMH) and ACO are both delivery-system models aimed at improving the coordination and quality of care while slowing spending growth. Both promote the utilization of electronic health records, patient registries and continuous quality improvement to achieve these goals. [1] The PCMH model calls for primary care providers to coordinate patient-centered, comprehensive and easily accessible care. This model has been developed over many years and is not part of any regulatory initiative.

The PCMH model faces significant challenges to implementation that are beyond the direct control of the primary care practice. [2] It does not offer monetary incentives for providers to work collaboratively and to optimize health outcomes. Additionally, most primary care practices do not have financial arrangements that would enable them to share in savings resulting from decreased hospitalizations and ED visits.

It is hoped that the ACO model will address these limitations since it emphasizes the importance of creating a coordinated and patient-centered care system. According to CMS, ACO models are “meant to allow providers to break away from the tyranny of the 15-minute visit, instill a renewed sense of collegiality, and return to the type of medicine that patients and families want. For patients, coordinated care means more ‘quality time’ with their physician and care team (a patient’s advocate in an increasingly complex medical system) and more collaboration in leading a healthy life.” To ensure that these goals are being met, CMS will require ACOs to meet quality and patient satisfaction benchmarks in addition to metrics focusing on chronic disease prevention and management.

The ACO and PCMH models should not be viewed as competing models, but as complementary models with the potential to improve health care delivery and reduce costs. ACOs will require a strong primary care core to succeed and, in turn, could provide essential delivery-system infrastructure and benefits to the PCMH model.


[1] Accountable Care Organizations - AHA Research synthesis Report. (2012) Retrieved from

[2] Primary care and accountable care--two essential elements of delivery-system reform. N Engl J Med. 2009 Dec 10 ;361(24):2301-3.

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