Researchers have compiled data on $682 billion worth of claims to look at the truth behind medical costs.
Researchers have compiled data on $682 billion worth of claims to look at the truth behind medical costs. - 
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In healthcare there’s a ton of mind-numbing jargon – "providers", "carriers", "the dual eligibles", "fee-for-service".

But if there’s one acronym that should take up just a bit of brain space – other than the ACA, which stands for the Affordable Care Act, of course – it’s ACO. What does it stand for? Accountable Care Organization.

There are more than 600 ACOs up and running across the country. And while you may not know what it means, you may be in one, with an estimated 1 in 7 Americans served by one.

So what is it?

It’s basically a group of doctors, nurses and pharmacists who work together to improve care and lower the cost of that care. Sometimes it’s a simple follow-up call to a patient. Sometimes it’s unraveling a mystery.

Jeff Brown – who works with three New Jersey-based ACOs remembers one Trenton guy who kept showing up in the ER.

“His wife had recently passed away, and he didn’t know how to cook for himself or go to the grocery store," Brown recalled. "And so what the Trenton health team determined was they needed to take this guy home and [show him] how to shop for himself and how to prepare some meals."

If that sounds like more work for doctors and nurses, it is. Shifting people away from expensive ER and hospital stays, and moving them towards cheaper primary doctor visits takes effort. What’s the incentive for healthcare providers? In a word: Money.

In an ACO, providers can get paid more if they meet patient quality benchmarks and keep costs down, said Dr. Kavita Patel at the Brookings Institution.

“This is one of the few ways that we have of trying to change how we actually interact with patients and providers and cut costs at the same time,” she said.

But Northwestern economist David Dranove said, based on 20 years experimenting with similar concepts, when healthcare providers have teamed up, we’ve seen prices rise and consumer choice shrink, leaving communities with partnerships that can stymie future change.

“The way they decide to deliver medical care in a community will become the way that that community receives its medical care, for better or for worse,” he said. Dranove said he hopes that as the creation of ACOs is on the rise, they'll proceed slowly.

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Follow Dan Gorenstein at @dmgorenstein