An ACO gets a bonus payment of up to 50% of the cost savings from Medicare Parts A and B for its patients. (If an ACO is willing to risk losses as well as bonuses (2-sided), they get up to 60% of the savings instead of 50% 42 CFR 425.606.
Medicare requires ACOs to have at least 5,000 Medicare patients. With 260 Medicare patients per doctor, this means at least 20 primary care doctors in each ACO. Most ACOs are larger. However 3-8 doctors give better care, because they take more responsibility and have fewer managerial distractions than big practices (Kussin 2011, p.36). With at least 20 doctors, each doctor has little effect on the ACO's bonus, so the ACO needs internal incentives to motivate doctors, such as reviews of doctors, limits on expensive procedures, and rewarding individual doctors for cutting their costs. Much like an HMO.
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