Which statement about accountable care organizations (ACOs) is most correct?

• A. ACOs are prohibited from sharing savings with participating providers.
• B. ACOs have no financial incentives related to performance.
• C. ACOs can distribute bonuses when targets are met and impose penalties when targets are missed.
• D. ACOs reimburse providers using a flat, non-performance-based payment.

Answer: (C)

ACOs are built on shared savings and risk sharing. They tie provider compensation to performance on cost and quality: when care is efficient and quality targets are met, the organization can receive a bonus from the savings generated. In arrangements that include downside risk, failing to meet targets can result in penalties or reductions in payments. This combination—bonuses for good performance and penalties for shortfalls—drives care coordination and cost containment by aligning incentives across providers.

Options that claim no savings can be shared, or that there are no financial incentives, or that payments are flat and non-performance-based, don’t align with how ACOs are designed to operate.