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In an effort to improve the quality of patient care and make health care more affordable, U.S. health insurer CIGNA Corp. (CI - Analyst Report) has recently formed an ‘Accountable Care Organization’ (“ACO”) with Brown & Toland Physicians.

An ACO is a group effort by health care providers, who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost, and overall care offered to members. By focusing on the needs of patients and linking payments to outcomes, this model of care is intended to improve the health of individuals and communities and curb the rising health care costs.

Cigna calls its ACO-like initiatives Collaborative Accountable Care (CAC). ACOs or Collaborative Accountable Care is one of the several ways by which President Obama has sought to improve the quality of health for all Americans. It is viewed as a tool that would deliver seamless, high quality care for the entire population.

Cigna’s newly formed CAC program, head quartered in San Francisco, is first of its kind commercial PPO-based ACO initiative with an independent practice association (IPA).

Cigna is engaged in 42 collaborative accountable care initiatives in 18 states. These programs encompass more than 390,000 Cigna customers and more than 5,500 primary care physicians. Cigna launched its first CAC program in 2008. The company aims to have 100 of these and bring its customer base to 1 million by the end of 2014.

The Health Care Reform called for such an arrangement in order to control the unnecessary expenses associated with lack of coordination between multiple physicians and other providers. Most Americans with multiple chronic conditions receive care from multiple physicians, which often resulted in patients not getting proper attention from the physicians.

A large percentage of the sick population ended up being victims of medical errors and faced hospital readmissions within days of their discharge. Thus, ACOs were formed to reduce the exorbitant amounts spent due to lack of managed care.

Companies like UnitedHealth Group Inc. (UNH - Analyst Report) and Aetna Inc. (AET - Analyst Report) are also aggressively forming ACOs. Going forward, we expect acceleration in the formation of such patient-centered collaborations.