Final ACO Rules Relax Physician Requirements

October 20, 2011

Many of the ACO rules have changed and "improved." Here's how.

The much-anticipated final rules for Medicare’s ACO model are finally here, and so far, they look promising.

“We listened very carefully to the more than 1,300 comments we received on the proposed rule released this spring, and this final rule includes a number of improvements suggested by those comments that will strengthen the program,” CMS administrator Donald Berwick said in a statement issued this morning.

Those key improvements are:

Reducing the number of performance measures used to determine the amount of savings and/or losses experienced by the ACO providers. The proposed rule included 65 quality measures in five domains. The final rule includes only 33 quality measures in four domains: quality standards on patient experience, care coordination and patient safety, preventive health, and at-risk populations.

Removing the EHR requirement. The proposed rule required that 50 percent of participating primary-care physicians attest to meaningful use by the second year of participation. That rule is no longer in effect.

Eliminating financial risk in the one-sided risk model. The proposed rule required ACO providers to share losses in the third year of participation (if measures weren’t met). The final rule allows ACOs to experience no losses. In the one-sided risk model, participants will share in up to 50 percent of savings. The two-sided risk model remains the same. The ACO will share in losses, however, it can share in up to 60 percent of savings.

Adding more flexibility to the start date. Groups are now allowed to apply for ACOs throughout 2012. 

“The new rule is an easier pill to swallow, but still difficult for most systems to fully digest,” Dan Mendelson, CEO of Avalere Health, said in a statement. “ACOs will get to keep more of the upside profits from effective cost control -- including savings from reduced re-hospitalizations -- and there are fewer quality metrics and many of the industry’s legal concerns appear to have been addressed. But fundamentally, most health systems continue to struggle with the fact that their present operations are oriented toward billing per service, and not taking on risk and responsibility for quality.”

HHS also announced a partner initiative, dubbed the Advance Payment Model, which will support physician-owned practices and rural providers participating in ACOs who need additional start-up resources to build the necessary infrastructure for participation. The advanced payments would be recovered from any future shared savings achieved by the ACO.

According to a statement issued by HHS, the final rules and the new initiative “add to the menu of options for providers looking to better coordinate care for patients and will make it easier for providers to deliver high quality care and use healthcare dollars more wisely.”

The AMA said it's “pleased” that the final rule includes many of its recommendations to help make ACO participation an option for all physicians.

“The AMA has stressed throughout this rule-making process that, if well-implemented, the ACO model offers promise to improve care coordination and quality while reducing costs," Peter Carmel, president of the AMA, said in a statement. "This final rule requires a full, in-depth review to ensure it maximizes those potential benefits for Medicare patients and physicians.”

More information on the final ACO rule is available here.

Stay tuned for reactions to the final rules from physicians and healthcare experts next week. Until then, let us know your thoughts. How are the final rules influencing how you view ACO participation?