New Models of Care: Accountable Care and Integrated Care Organisations

The government's latest change to the NHS is already stirring up huge controversy. When plans to introduce Accountable Care Organisations (ACOs) first emerged, health campaigners quickly found connections between these new organisations and bodies of the same name that exist in the United States.

Accusations were made that ACOs signaled a radical move towards an insurance-based system. A court case against the government was launched involving one of the plan’s most prominent critics, Prof Stephen Hawking, which has forced the government to announce a pause, to consult with the public.

In early 2018, NHS England began refering to ACOs as Integrated Care Organisations (ICOs) in an attempt to distance them from the US organisations.

So what’s behind the controversy and how could ACOs/ICOs affect the NHS and our healthcare?

At present, health and social care are co-ordinated through hundreds of different contracts and are paid for out of two separate budgets; health is paid for by the NHS and social care and public health are paid for by local authorities or by means-tested charges. The Government's plan is to integrate these services.

There is little debate about the fact that there could be huge benefits from getting health and care services to work closely, merge or integrate. It has been a desirable aim amongst policy makers for many years. It is hard to achieve, but there are some examples in the NHS already, but not by using ACOs. Accountable Care Organisations are a very different brand of integration and raise some serious questions which have yet to be answered.

Five key concerns with this version of integration

1. Why rush forward with ACOs when there is yet to be any real evidence that they will work? It is only 5 years since the last major re-organisation, which has been widely criticised.

2. Why allow private companies the opportunity to take control of such a major role? Their record in running NHS services included many examples of contracts that have failed. If this is not the intention why not just rule it out

3. What happens when ACOs run out of money, who goes without care and how is this decided?

4. Surely ACOs are destined to fail unless proper funding is restored, the same is also true of any other form of integration.

5. Does this version of integration really fit with the key principles of the NHS - eg How can we make sure that healthcare remains free at the point of use, when more of it will be provided in the community where means-tested social care already exists?

Q&A: Accountable Care Organisations and Integrated Care Organisations

Accountable Care Organisations and other new models of care within the NHS are a complicated area. We've put together the answers to some frequently asked questions on ACOs.

Q: What is integrated care?

Integrated care is a concept which encourages organisations to work together under a single plan. It can involve sharing budgets and merging functions, but it is not a new concept and many countries have been experimenting with it in their healthcare systems. Accountable Care Organsiations (or Integrated Care Organisation as the government now calls them) are just one version of integration.

Q: If ACOs are a type of integration, what makes them distinct?

Accountable Care Organisations as proposed by NHS England aim to involve local authorities, NHS trusts, GPs, the voluntary sector and the private sector. The aim eventually is for one organisation to sign a single 10-15 year contract and take the lead in planning and organising all care, with others providing services as subcontractors.

Until one organisations takes control and a contract is signed, they will remain an alliance of cooperating organisations.

Crucially each ACO/ICO will have a single fixed budget, so in many ways this is about creating a stricter financial regime.

They also incentivise cost control, by allowing the holder of the ACO contract to retain a proportion any savings that are achieved and moving towards a new capitated payment mechanism.

Another defining feature is supposed to be better area based planning, but this has been disputed by Prof Allyson Pollock and others, she says  "It is not clear how people living in the Contract Area would receive health services if they are not on the ACO’s list". In other words the ACO arrangement could be more like a membership system, but not guaranteed by where you live, she asks "How can services be planned for everyone when not everyone in a CCG’s area would be included on the ACO list?"

Q: How advanced is the development of integrated care and ACOs?

The most advanced areas are Dudley and Greater Manchester, both of which were planning to launch an ACO in April 2018, however development has now been delayed in both areas.

In June 2017, NHS England announced eight areas which would become integrated care systems (ICSs), a precursor to ACOs.

  • Frimley Health including Slough, Surrey Heath and Aldershot;
  • South Yorkshire & Bassetlaw, covering Barnsley, Bassetlew, Doncaster, Rotherham, and Sheffield;
  • Nottinghamshire;
  • Blackpool & Fylde Coast with the potential to spread to other parts of the Lancashire and South Cumbria at a later stage;
  • Dorset;
  • Luton, with Milton Keynes and Bedfordshire;
  • Berkshire West, covering Reading, Newbury and Wokingham;
  • Buckinghamshire.

Two other areas, West, North and East Cumbria, and Northumberland, are also heading to ICS development.  In future, Surrey Heartlands could also have a devolution setup similar to Greater Manchester and be given financial autonomy in return for ACO development.

Accountable care organisations (ACOs) are developing out of  the 44 Sustainability and Transformation Partnerships (STPs) published at the end of 2016. All the STPs contain plans for organisational changes that could eventually lead to the development of a full-blown ACO.

The STP areas are all at various stages of development. Some STP areas are developing as one single ICS, whereas other areas are developing as two or more ICSs within the STP boundaries. There is considerable variation between STPs.

Q: Can a private company run an ACO?

An ACO is run under a single contract by a single organisation. The contract will be awarded following a competitive tendering process. This process is open to all organisations - NHS, for-profit private companies and third sector organisations.

There is no legislation at present that prevents an ACO contract being awarded to a private for-profit company. So an ACO contract could effectively hand over the legal responsibility for provision of universal healthcare in an area to a private company.

Which is where some of the controversy comes from as it would be possible for a company like Virgin Care, which already has many NHS contracts to take on this major role, but so far no ACO contracts have been signed with any organisation - public or private, although two international health firms, Centene and United Health have shown interest in helping to develop them.

Q: How are ACOs funded?

The holder of an ACO contract will be provided with a fixed or capitated budget. From this budget the contract holder will have to provide (either itself or via sub-contracts) all health and social care required in its area under the contract.

ACO contracts in other areas of the world, including the USA and Spain, allow the holder of the contract to keep a certain percentage of unspent budget or ‘profits’. In theory, this type of profit-sharing incentive is meant to lead to efficiencies and a focus on improving population health to reduce costly procedures, in particular hospital care and A&E admissions.

Q: Is new legislation needed for ACOs?

Originally the government had intended to introduce primary legislation, but it changed these plans after the election substantially weakened its Parliamentary position. Subsequently it has been trying to proceed by changing regulations (secondary legislation) - leaving many of the existing organisations and structures in place, however the legality of this approach has been challenged.

In order for an ACO to be put in place a new contract needs to be available for the commissioners to use. In August 2017, a draft ACO contract was published, designed to allow Clinical Commissioning Groups (CCGs) to choose to commission ACOs in their areas.

This contract publication was followed by a two month consultation on the draft contract. At this point it became clear that before the contract could be used, secondary legislation would be needed to amend the Health and Social Care Act 2012.

At the start of January 2018, the secondary legislation needed was expected to be put in place in February 2018 thereby allowing the first ACOs to start in April 2018. However, in January 2018 Sarah Wollaston MP chair of the Commons Health Committee wrote to Jeremy Hunt asking that any moves to implement ACOs be paused pending further consultation. Prior to this legal challenges to the setting up of ACOs had been filed (see below). Both the letter and the legal challenges have resulted in a delay to the legislation that will allow ACOs.

In late January 2018, Jeremy Hunt wrote to the chair of the Commons Health Committee saying that the ACO contract implementation would be paused allowing for more consultation. NHS England has been forced to conduct further public consultation work on the ACO contract.

Q: Will ACOs lead to rationing?

ACOs operate with a capitated or fixed annual budget that allows the providers to retain and share any savings made.

This type of approach has led to concerns that services will be rationed either because the budget provided is just not enough to provide all universal healthcare services or, and this is particularly pertinent if the contract holder is a private company, to produce savings to increase the amount of budget that the providers can retain as profit.

Rationing services also encourages people to seek private alternatives, which in turn reduces the budget spend under the ACO, potentially leading to higher ‘profits’.

Q: What legal challenges have taken place?

Two legal challenges against the establishment of ACOs have taken place. When they began in early 2018, NHS England agreed to a pause on the development of ACOs to allow for a 12 week consultation procedure. The consultation was due to begin in March 2018.

999 Call for the NHS

The campaign group 999 Call for the NHS, backed by law firm Leigh Day, lodged a judicial review in October 2017. This claims that the contract for accountable care organisations breaches the Health and Social Care Act 2012.

The papers claim that the formation of ACOs breaches section 115 and 116 of the 2012 Act, which relate to the price a commissioner pays for NHS services and regulations around the national tariff.

The campaigners’ case argues that under current legislation, prices paid for NHS services must reflect how many patients receive the care under that specific service, whereas the ACO contract allows commissioners to give providers a fixed budget for the population in the area.

The judicial review was given permission to proceed in late December 2017 and it was heard 24 April 2018.

The Judge Mr Justice Kerr ruled that the court did not find anything unlawful with the payment mechanism proposed by the ACO contract.

The judgement said that the objection in the case was a political objection to the payment mechanism and therefore it "is not a matter for the court.”

The campaign group said it would appeal the decision.


The second application for a judicial review was lodged on 11 December 2017 by Dr Graham Winyard, Dr Colin Hutchinson, Allyson Pollock and Sue Richards, and Professor Stephen Hawking, under the campaign name JR4NHS.

The academics are working with Harrison Grant Solicitors and Nigel Pleming QC to argue that introducing new commercial, non-NHS bodies (ACOs) to run health and social care services without proper public consultation and without full Parliamentary scrutiny would be unlawful. They argue that the consultation procedure around the ACO contract was insufficient.

In early July 2018, the judge, Mr Justice Green, ruled that the policy was “lawful” however the health and social care secretary Jeremy Hunt was “under a duty” to consider criticism against ACOs when it goes to public consultation.

The High Court held that the policy falls within the “statutory powers of a clinical commissioning group” and is “not contrary to the ‘commissioner-provider split’ under the National Health Service Act 2006”.

The campaign has decided not to appeal the decision.

Q: What is the difference between integrated care and an ACO?

Integrating health care has been a goal of NHS England for a number of years and it has implemented a number of projects. The Sustainability and Transformation Plans (STPs) have provided NHS England with the opportunity to push forward much more ambitious integration programmes that bring together health and social care.

NHS England is encouraging all STP areas in England to work towards becoming integrated care systems (ICS); this is the first step to becoming an ACO.

An ICS involves NHS organisations, local authorities and other non-NHS organisations providing health and social care, working more closely together.

ICSs will cover a defined geographical population and have a budget known as a ‘control total’.

In contrast to an ACO,  an ICS does not have a single contract, but organisations work together under a variety of contracts.

An accountable care organisation (ACO) operates with a single contract to provide health and social care to a predetermined population (usually the population of a precise geographical area) for a fixed (capitated) budget.


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