OBJECTIVES: Accountable Care Organizations (ACOs) are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care to their Medicare patients. The objective is   to understand how the policy development and implementation is helping to solve the cost and quality of the fragmented U.S. healthcare system. METHODS: Knovner and Knickman (2011) textbook on Healthcare delivery in the United States elaborates on the major issues and concerns facing the U.S. healthcare system was used to evaluate  the policy perspective and CMS published data was  used to compare the performance of ACOs. RESULTS: ACO was able to deal with all the major issues and concerns pointed by Knovner and Knickman(2011) in the policy perspective. CMS published data shows that 360 Medicare ACOs has been established serving 5.6 million Americans. ACOs in Pioneer ACO model and Medicare Shared Savings Program (MSSP) generated over $417 million in savings for Medicare. Quality of Care and Patient experience showed improvements in 28 of the 33 quality measures and 30 of 33 quality measures in Pioneer and MSSP ACOs. Only 3 Pioneer ACO and 1 MSSP generated shared losses. CONCLUSIONS: The new program has tried to learn from the various shortcomings of such programs that were implemented before in order to prepare a good program that has taken into consideration all the factors that are necessary for the economic delivery of healthcare without excluding the quality oriented approach. It will also act as a model for private insurance firms or other organizations to adopt such a model in order to produce better outcomes at lower costs in the future. Therefore, if this model is revised and implemented properly it will be an economic solution to this problem of the unsustainable increase in healthcare costs of the U.S.