CMS Appeals to Rural Practices with Another ACO Participation Perk

June 1, 2011

As the government preps for a heavy summer reading schedule that no doubt includes pages of criticism to the 429-page ACO proposal, the question remains: Will all the extra shared-savings sweetening get healthcare organizations sweet on shared savings?

The Centers for Medicare and Medicaid Services recently piled another dollop of sugar onto its push for ACOs with a rural ACO financial incentive.

According to a fact sheet released last week by CMS, smaller ACOs in rural areas will be eligible for a savings exemption from the required 2 percent savings threshold under the one-sided model for ACOs with less than 10,000 assigned beneficiaries.

The news came on the heels of CMS’ announcement that it will incorporate three new initiatives into its proposed ACO program to incentivize providers to participate in ACOs. These include the launch of a new Center for Medicare and Medicaid Innovation (aka the “Innovation Center”), which is intended to support the new “Pioneer ACO model” that will be available to providers this summer. According to CMS, the Pioneer model is designed for advanced organizations ready to participate in shared savings. It is projected to save Medicare up to $430 million over three years by better coordinating patient care.

And now, as the government preps for a heavy summer reading schedule that no doubt includes pages of criticism to the 429-page ACO proposal, the question remains: Will all the extra shared-savings sweetening get healthcare organizations sweet on shared savings?

Greg Mertz, managing director of Healthcare Strategy Group and a former physician practice manager, weighed in.

“I think [the lack of interest in ACOs] is more in response to the objections of the ten demonstration projects,” said Mertz, referring to the Medicare Physician Groups Practice Demonstration. “All ten of the original demonstration projects submitted objections to the ACO model that was proposed.”

The demonstration, which took place over the course of five years, brought together physician groups in a collaborative project with the goal of improving preventive and chronic care delivery processes and generate shareable savings for the Medicare program.

“The ACO model as it’s proposed really doesn’t have a lot to offer small practices,” said Mertz. “You’re going to spend a million and a half dollars to develop the ACO, and shared savings return is going to be modest at best. I think we’re years away from ACOs being high on everyone’s list of things to do.”

ACO proposal aside, Mertz said the future of healthcare is in collaboration.

“Physicians and hospitals are going to see the need to work closer together with a focus on outcomes and cost containment and efficiency, while this ACO thing happens in the background,” said Mertz. “Doctors and hospitals have to learn to work together with those three elements: cost, quality, and outcomes.”