Two Key Differences You Need to Know About a PCMH and an ACO


As the US healthcare sector shifts away from a fee-for-service model to a value-based care model, states continue to experiment with various pilot programs or models to manage care for their Medicaid populations. Two of the most popular models are the Patient-Centered Medical Home (PCMH) and the Accountable Care Organization (ACO). Both PCMHs and ACOs are focused on helping providers create a more individualized, managed patient ecosystem in order to improve care and outcomes for Medicaid beneficiaries, but they achieve their goals in different ways.


According to the Agency for Healthcare Research and Quality (AHRQ), a Patient Centered Medical Home “is accountable for meeting the large majority of each patient’s physical and mental healthcare needs, including prevention and wellness, acute care, and chronic care.” The goal is to improve overall health by transforming how primary care is organized and delivered. Acting as a primary care organization, the PCMH coordinates patient care across all elements of the broader healthcare system, including specialty care, hospitals, home health care, and community services and supports. They bring together primary care, behavioral health, and social service providers to coordinate patient-centered care for Medicaid’s most complex and high-cost members. Under the Affordable Care Act, states have the option of implementing a PCMH. Michigan is a good example of having done this successfully.


Blue Cross Blue Shield of Michigan, now in its eighth year, manages one of the largest and oldest medical home initiatives in the country, with 4,534 primary care physicians in 1,638 practices. The initiative has reduced adult ER visits by 15 percent, ambulatory care inpatient stays by 21 percent, and monthly per-patient costs by $26. In addition, there was an increase in the quality of care and use of preventive services overall.


Accountable Care Organizations are designated entities held accountable for the financial and quality outcomes of a defined population which may be geographically dispersed. ACOs consist of networks of primary care, behavioral health, and community support providers. (Many of the primary care providers involved may actually be a certified PCMH.) The goals of an ACO are to improve the patient experience of care, improve the health of target populations, and reduce the per-capita cost of healthcare. They are driven by an agreement that every member will work together to change how they receive reimbursement. No two Medicaid ACOs are identical, but here are the three models most commonly found:

  • Provider-driven – The provider establishes collaborative networks and assumes accountability for the cost of care
  • MCO-driven – Managed Care Organizations (MCO) retain financial risk but implement new payment model and partnerships with providers
  • Regional-Community Partnership-driven – Regional/community organizations form care teams with providers and receive payments


In Minnesota, the Medicaid ACOs are called Integrated Health Partnerships (IHP). Minnesota has 21 IHPs and over 460,000 covered lives. In three years Minnesota has achieved 14 percent reduction in inpatient admission, a 7 percent reduction in ER visits, and has received over 85 percent of payments tied to meeting or beating statewide quality benchmarks. They have also achieved an estimated savings of nearly $156 million compared to trended targets.

You can see from these examples that the PCMH and Medicaid ACO both focus on improved care at a reduced cost. Now let’s discuss two key differences between these models: how they address the social determinants of health and how they are reimbursed.

Addressing the Social Determinants of Health

Both the PCMH and ACO model understand the importance of addressing health-related social needs in order to treat the whole patient, but their approaches are distinct. The PCMH is a primary care provider who understands the importance of supportive services such as housing, mental health, youth and family services, etc. In fact, as a condition of participation in the initiative, PCMHs are required to work toward the practice transformation objective of developing clinical-community linkages. This requirement can be satisfied by developing partnerships between the primary care practices and community-based organizations that provide services and resources which address the significant socioeconomic needs of the patient population.

The ACO builds upon the community collaboration of the PCMH by adding data sharing and real-time communications with other providers within the ACO. This efficient flow of patient data drives effective communication, coordination, and integration between primary care and community providers in a specific geographic area and improves overall patient outcomes.

Payment Models

The payment model is the fundamental difference between a PCMH and an ACO. Whereas PCMH providers are primarily accountable to themselves when investing in the development of patient-centered care, members of ACOs are rewarded or penalized based on their performance at regular intervals. This is done through alternative payment models, such as:

  • Pay-for-performance based on quality
  • Shared savings and risk models
  • Global budget or capitated model


PCMHs and ACOs will continue to be important vehicles for states, communities, and providers striving to make the transition from fee-for-service to value-based programs. For a good look at how the PCMH is transforming communities, check out AAFP’s article “Broader Look Shows How PCMH Touches Practices, Patients.” For an overview of all active Medicaid ACO programs, check out this great resource from the Centers for Healthcare Strategies.

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