MedPAC cautiously approves ACO model

In a letter to the Centers for Medicare and Medicaid Services, MedPAC says that Accountable Care Organizations (ACO’s) have the potential to improve quality and contain costs in the traditional Medicare fee-for-service program, but they must be carefully structured to get the job done. 

The letter states that that in order to work, ACOs can't simply be given bonus payments if they meet goals for controlling costs and improving quality, but they must also pay for some of the overruns if they exceed the spending target they are given.


(Sources: The Advisory Board Daily Briefing,, November 24, 2010; MedPAC letter,, November 22, 2010)