Despite years of education and training in patient care, most physicians make it through residency or fellowship without spending much time in the weeds of how ongoing reforms to health care payment and delivery truly operate. So when physicians are making the transition to practice, experts urge them to get up to speed on the ins and outs of value-based care, particularly if they will work in a setting that is part of an accountable care organization (ACO).
“Anytime you have any sort of employment or partnership directly related to your day-to-day work, you should always make sure you fully understand what you're getting yourself into,” said Christopher Botts, director of value-based care for the AMA.
Value-based care is a type of care delivery and payment arrangement that puts additional focus on the quality of health care and patient health outcomes, along with managing associated costs and use of services, as opposed to only focusing on the amounts of services provided. ACOs are entities that can comprise groups of physicians, hospitals and other health professionals who voluntarily work together to take accountability for the health care costs and the quality of care provided to patients treated by the ACO’s members. Depending on the arrangement, members of the ACO can share in a portion of the savings they create when delivering higher quality, more cost-efficient care. ACOs can be geographically based or focus on treating patients with particular health conditions.
Overall, 53.5% of physicians reported that their practice participated in at least one type of ACO in 2024, according to an AMA Policy Research Perspective report (PDF). About 40% of physicians worked in a practice that was part of a commercial ACO, the report said, while 37.6% were in a practice that was part of a Medicare ACO.
The Centers for Medicare & Medicaid Services (CMS) estimates that as of January, 14.3 million patients with Medicare are getting health care through an ACO, up 4.4% over 2025. CMS data also shows that in 2024, the most recent year for which data is available, ACOs with shared-savings agreements earned $4.1 billion and saved Medicare $2.5 billion.
The AMA is leading the charge to reform the Medicare payment system. Alternative payment models such as ACOs are a key approach to achieving value-based care by aligning incentive payments to deliver high-quality and cost-efficient care for a clinical condition, a care episode or a patient population, says an AMA issue brief (PDF).
It’s important, though, that physicians know what they are getting into when accepting a position that includes their participation in an ACO.
Health systems or practices may be partially or entirely focused on providing accountable care, and before signing on the dotted line, experts say that physicians should do three key things:
- Check the ACO’s financial health.
- Learn more about your data access.
- Understand your individual financial incentives.
Learn more with the AMA STEPS Forward® “Physician Payment Models Guide.” With this resource, doctors will learn to describe the terminology used in value-based care, identify common contractual provisions, ask key questions about their design and accountability, and formulate strategies for engagement and evaluation in these arrangements.
The STEPS Forward resource is enduring material and designated by the AMA for a maximum of 0.5 AMA PRA Category 1 Credit™️. The resource is part of the AMA Ed Hub™️, an online learning platform that brings together high-quality CME, maintenance of certification, and educational content from trusted sources, all in one place—with activities relevant to you, automated credit tracking, and reporting for some states and specialty boards. Learn more about AMA CME accreditation.
Due diligence is a must
Before applying for a position of any kind, you will almost certainly do an internet search to find out more about the health care organization and its track record. The same kind of basic investigation should be the first step for physicians before accepting a job that will involve participation in an ACO. Of particular interest should be the ACO’s financial health.
Some questions to seek answers for include:
- What are the ACO’s past savings?
- Has the organization had losses recently?
- How is the ACO financed?
- What is its current relationship with payers?
ACOs can be funded in many ways, including by health systems or private equity investments (PDF). They can be led by hospitals or groups of physicians. Find out more about how the ACO you are considering joining is structured.
Publicly funded initiatives such as the Medicare Shared Savings Program will have publicly available data online for physicians to review. The performance of ACOs that take part in that program will be tracked and published.
Commercial ACOs are a bit tougher to investigate. Physicians, however, can do some internet sleuthing that may help. For example, health care organizations sometimes have in-house publications intended to highlight programs or people within the organization.
“There's no guarantee that the entity is going to show up in any of those places,” Botts said. “But, as always, doing a wide swath of in-depth investigation is worth the time, especially if it will have a significant effect on your daily workload and overall compensation.”
Topics important to understanding ACOs are also covered in the AMA's 27-page guide, “Accountable Care Organizations: How to Perform Due Diligence and Evaluate Contractual Agreements” (PDF).
In addition, the AMA has developed a snapshot on ACOs (PDF) that covers top-line issues for a solid overview of the topic.
Examine the data access
ACOs are about total accountability for quality and cost, and if you will also be held financially accountable for the care that you give patients, it is important to know what kind of data the ACO will give you. Having timely, sufficient and correct data can be critical for making adjustments.
If the ACO is sharing data with physicians in a way that allows them to aggregate and analyze the information, you will be more able to meet the standards that the ACO is setting out for you. Operating in a mysterious environment could lead to increasing levels of confusion or frustration.
Some questions to answer include:
- How often is data shared with me?
- What is included in the shared data?
- What is the quality and usefulness of the data?
- What platform does the ACO use to share data?
- Are additional levels of analytics offered?
For physicians interested in learning more about ACO participation, the AMA has also created a model checklist (PDF) that identifies top issues for physicians to consider.
What are the financial incentives?
It’s crucial that physicians accepting a position in an organization that is part of an ACO understand the methodology used for financial incentives and penalties, both at the organizational and individual physician levels. Also key is knowing the way the organization will distribute payments to physicians.
An ACO that participates in shared-savings programs may get disbursements for the amount it saves a payer, but there is another step in the process before you see any financial gain: the payments to individual participating physicians.
Depending on the specialty, if, when and how an ACO will distribute any financial incentives can vary widely. Quality bonuses should be clearly laid out in your employment contract, and you should understand how those bonuses or incentives will be assessed.
Primary care physicians may have a more straightforward disbursement process; the issue can be more complex for other specialists. You will want to know how likely it is that you will see any financial incentives from ACO participation.
Physicians should ask themselves, “How is my effort evaluated, and how is that then translated into some form of compensation?” Botts said. “Then, as always, everybody has to weigh the pros and cons and make the best decision based on the information they have.”
The AMA’s materials on ACOs are part of a broader set of value-based care resources, along with the AMA Business of Medicine education program, which also includes additional resources on revenue-cycle management and evaluating contractual agreements.
