CMS releases proposed ACO rule

The accountable care organization proposal outlines how physicians and hospitals can share in the Medicare savings they generate through better care coordination.

By Charles Fiegl — Posted March 31, 2011

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The Centers for Medicare & Medicaid Services has proposed new payment regulations allowing physicians, hospitals and other health care professionals to form special networks to coordinate patient care and share in any savings they generate for the government by keeping Medicare patients healthy.

On March 31, the agency published the much-anticipated rule for accountable care organizations, or ACOs, in the Federal Register (link). The health system reform law requires the Dept. of Health and Human Services to implement a Medicare ACO program by 2012.

"An ACO will be rewarded for providing better care and investing in the health and lives of patients," said CMS Administrator Donald M. Berwick, MD. "ACOs are not just a new way to pay for care but a new model for the organization and delivery of care."

The reform law lays out a basic structure for these organizations, which are to be led by primary care physicians, Dr. Berwick said. Each network, with a minimum of 5,000 patients under physician care, would establish a system to receive and distribute shared Medicare savings over at least a three-year period. However, the health professionals in the ACOs also would share the risk and potentially be held liable for any cost increases that occur if care coordination fails.

Traditional fee-for-service and Medicare Advantage programs won't be going away anytime soon. The ACO program is just one initiative aimed at improving the fee-for-service program, said an Obama administration official, who spoke on background with reporters. "The program has great promise for the 45 million beneficiaries in the Medicare program," the official said.

Patients will maintain the freedom to choose their physicians and won't be forced to be treated by doctors in an ACO, officials said. Likewise, a Medicare beneficiary would keep the option to seek care from other doctors and hospitals outside a shared savings group when his or her primary care physician is part of an ACO.

The American Medical Association will fully review the proposed CMS rule, as well as a related March 31 joint policy statement from the Federal Trade Commission and the Justice Dept. about how physicians and hospitals can form ACOs without running afoul of federal antitrust laws (link).

"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, MD, speaker of the AMA House of Delegates. "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."

The proposed rule had been under review by the White House Office of Management and Budget since Feb. 14. Physicians and other interested parties will have until June 6 to comment on the proposed regulations, after which CMS will promulgate a final rule.

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