To understand shared savings, you need to understand accountable care organizations (ACOs), or a group of health care providers—hospitals, physicians, maybe even post-acute providers—who are collectively responsible for the cost and quality of care a particular set of patients receive over time.

Physicians choose to be part of an ACO, and those physicians have their own patients. If a patient gets most of his or her primary care from physicians in a particular ACO over the course of the year, then that ACO is going to be responsible for the cost and quality of the care they receive. And that means all the care—even from providers outside of the ACO.

So that's shared savings in a nutshell: dollars are tied to patients, patients are tied to physicians, and physicians are tied to ACOs. But, as you might expect, the devil’s in the details. Watch the clip to find out how ACOs get paid and qualify for a bonus.

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