CMS Issues Long-Awaited Proposal on ACOs


After months of deliberation, officials at the Centers for Medicare and Medicaid Services released on March 31 a proposed rule outlining how physicians, hospitals, and long-term care facilities can work together to form accountable care organizations and share in the savings they achieve for Medicare.

The voluntary program was created under the Affordable Care Act and will begin in Jan. 2012. Under the proposal, accountable care organizations (ACOs) could include physicians in group practice, networks of individual practices, hospitals that employ physicians, and partnerships among these entities, as well as other providers. The idea is for ACOs to be a partnership among a range of physicians, including specialists and primary care providers. However, only primary care providers will be able to form an ACO, according to CMS.

According to the proposed rule, providers in the ACO would continue to receive their regular fee-for-service payments under Medicare, but they could also qualify for additional payment if their care resulted in savings to the program. The proposed framework requires that ACOs meet certain quality standards and demonstrate that they have reduced costs in order to be eligible to share in any savings. The proposal outlines 65 quality measures in five quality domains: patient experience, care coordination, patient safety, preventive health, and care of at-risk and frail elderly populations.

"ACOs aren’t just a new way to pay for care; they’re a new model for the organization and delivery of the care under Medicare," Dr. Donald Berwick, CMS administrator, said during a press conference to announce the proposed rule.

Dr. Berwick said he doesn’t know how many ACOs will form under the program, but that the level of interest is "enormous."

Since the Affordable Care Act was passed last year, the health care community has been buzzing about how ACOs might be structured and if they could succeed in reducing health care costs. Integrated care organizations like Geisinger Health System in Danville, Pa., are considered to have a leg up because their hospital and outpatient care is already coordinated.

But Dr. Berwick said that the proposal allows for ACOs at various levels of development to participate. For example, less developed ACOs can choose to receive only shared savings for 2 years before assuming risk. More mature organizations can assume risk immediately but be eligible for greater levels of shared savings. "Our aim is to create on-ramps that will allow many to participate, depending on the different levels of maturity they are starting with," Dr. Berwick said.

CMS officials estimate that the program could result in as much as $960 million in Medicare savings over 3 years.

Although federal officials said that they expect the coordinated care to pay dividends in savings to Medicare, ACOs will not be set up like HMOs. Medicare beneficiaries will continue to be able to see their choice of providers under fee-for-service Medicare. Providers will be the ones that enroll in ACOs and must notify patients that they are receiving care within an ACO.

In addition to the ACO proposed rule, the Department of Justice and the Federal Trade Commission have also issued guidance on how physicians and hospitals that form an ACO can steer clear of antitrust laws. Officials at the CMS and the Office of the Inspector General have also issued a notice on potential waivers that could be granted in connection with the shared savings program, and the Internal Revenue Service has issued new guidance for tax-exempt hospitals seeking to participate in the program.

The CMS will be accepting comments on the proposed rule for 60 days. The agency also plans a series of open-door forums and listening sessions to explain the proposal and to get feedback from the public.

At press time, the American Medical Association said that it was reviewing the proposed rule and the policy statements from the Federal Trade Commission and the Department of Justice. In a statement, Dr. Jeremy A. Lazarus, the speaker of the AMA House of Delegates, said that ACOs offer "great promise" but that there are still a number of barriers to success, including the large capital requirements to fund an ACO and to make the necessary changes to individual physician practices.

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