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Accountable care organizations (ACOs) were created to improve quality and reduce unnecessary costs in Medicare by aligning providers’ financial incentives with patient outcomes. A central part of that mission is helping the federal government identify and reduce waste, fraud, and abuse. Unlike traditional fee-for-service Medicare, ACOs are rewarded for delivering high-value care, which gives them strong reasons to spot inappropriate spending and redirect resources toward services that benefit patients. This aligns directly with the Centers for Medicare and Medicaid Services’ (CMS) stated goal of protecting the Medicare Trust Fund while improving beneficiary care.
Medicare’s recent experience with skin substitutes illustrates both the opportunities and challenges of this approach, which has seen spending exploded nearly 40-fold to more than $10 billion last year. ACOs quickly identified how a broken payment system was fueling profiteering and patient harm. They elevated these concerns to CMS, deployed care management to address them, and demonstrated the very promise of accountable care: rooting out fraud and abuse while improving health outcomes. Yet current policy gaps still leave ACOs vulnerable when fraud occurs outside their control.