HHS’ ACO Proposal Arrives - What’s Next For Practices?

March 31, 2011

For practices, some crucial questions remain: Will they easily be able to join ACOs and get a piece of the savings? What will the impact on patient-care delivery models be?

CMS today issued proposed new rules for so-called Accountable Care Organizations, designed to encourage greater cooperation among health care providers who might normally be competing. 

The 429-page document “Medicare Program; Medicare Shared Savings Program: Accountable Care Organization” outlines how teams of physicians, hospitals, and other healthcare providers might work together to coordinate and improve care for Medicare patients - and save money in the process. To share in savings, ACOs are expected to meet quality standards in five key areas: Patient/Caregiver care, care coordination, patient safety, preventative health, and at-risk population/frail elderly health.

The proposed program, which HHS says is also loaded with protections to ensure patients' care choices are not limited by ACOs, comes with the expectation that communities will save as much as $960 million over three years for the Medicare program. And it’s scheduled to begin in nine months - by Jan. 1, 2012.

HHS Secretary Kathleen Sebelius said in statement that without such incentives, "it has been too difficult for health care providers to work together," and as a result "patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes."

For practices, though, some crucial questions remain: Will they easily be able to join ACOs and get a piece of the savings? What will be the impact on existing patient-care delivery models?

A few stakeholders have weighed in, and we’re expecting more in coming days.

“ACOs offer great promise for improving care coordination and quality while reducing cost, but only if all physicians who wish to are able to lead and participate in them,” said Jeremy A. Lazarus, a physician and speaker for the American Medical Association House of Delegates, in a press statement. “For this to happen, significant barriers must be addressed, including the large capital requirements to fund an ACO and to make required changes to an individual physician's practice, existing antitrust rules and conflicting federal policies.”

In an essay published by the New England Journal of Medicine, CMS Administrator Donald M. Berwick said the financial opportunity for an ACO to achieve shared savings "will vary" according to its initial tolerance for risk.
 

"Two different models are proposed. In the first model, ACOs earlier in their evolution can elect to assume a smaller share of upside gains but no risk of loss for two years and then transition in year 3 to accepting risk," said Berwick. "In the second model, organizations that are willing to take on both upside gains and downside risk can qualify for a higher proportion of shared savings from the start."

Additionally, "CMS plans to concurrently launch aggressive testing of innovative models for a nationwide technical support platform for ACOs, to complement the numerous ongoing efforts in which the private sector is already engaged," he added.

We’ll be continuing our coverage in coming days and weeks.