Accountable care organizations (ACOs) are networks of physicians and other providers that are held accountable for the cost and quality of the full continuum of care delivered to a group of patients. They are seen as a health care model that can both reduce costs and improve quality of care.
In the 2011-12 budget, New York State authorized a demonstration program on ACOs, which included seeking federal approval and waivers. The final budget granted the Department of Health (DOH) the regulatory authority to establish ACO criteria, including governance, populations to be served, adequacy of the ACO provider network, quality assurance and performance standards. The budget also authorized ACOs to contract with third party payers and allowed hospitals to become an ACO.
As of now, the above has not been implemented and is awaiting the development of regulations by DOH.
Here is an excellent background and analysis piece on the topic from Health Affairs.
-Jaime Venditti, 2/3/12