Article by Omnibus April 6, 2011
Last Thursday, the Centers for Medicare and Medicaid services released their long-awaited proposal for rules governing accountable care organizations. Accountable care organizations, also known as ACOs, were an integral part of the Affordable Care Act passed last year intended to keep down costs associated with treatment of Medicare recipients. An ACO is a group of healthcare providers who work with one another in order to better coordinate care for patients. The rules laid out by CMS are the first stage in implementing one of the first systemic reforms that the ACA created in an effort to keep costs down. The ACA requires that ACOs include Medicare beneficiaries, healthcare providers, and product suppliers on their governing boards. The program is expected to save up to $960 million over the next three years.
In an article published online in the New England Journal of Medicine, the director of CMS, Donald Berwick, explained the three primary goals of ACOs: slowing the rise in healthcare costs through improvement in care, improved care for individuals, and improved health for populations as a whole. The CMO proposal indicates what groups it will allow to lead an accountable care organization. The list includes hospitals that employ physicians, physicians in group practices, networks of individual practices, partnerships of any of the aforementioned groups, and “any other Medicare providers or suppliers as determined by the Secretary,” which leaves a great deal of wiggle room for the Secretary of Health and Human Services.
In his article, Dr. Berwick states, "Whatever form ACOs eventually take, one thing is certain: the era of fragmented care delivery should draw to a close. Too many Medicare beneficiaries -- like many other patients -- have suffered at the hands of wasteful, ineffective, and poorly coordinated systems of care, with consequent costs that are proving unsustainable. CMS believes that with enhanced cooperation among beneficiaries, hospitals, physicians, and other healthcare providers, ACOs will be an important new tool for giving Medicare beneficiaries the affordable, high-quality care they want, need, and deserve."
Dr. Berwick explained the two different models by which a group could become an ACO during a call with reporters designed to help clarify the new proposition.
The first model is designed for organizations that are not experienced with an ACO model. This option allows them to get a lower amount of shared savings; however, they are not at risk of losing Medicare reimbursements for the first two year. After two years, they would be liable for penalties if they do not manage to meet certain benchmarks. This gives inexperienced groups an opportunity to adapt to being an ACO.
The other model is designed for groups that have experience with the ACO model. Unlike the first model, it provides the group with greater savings during the first two years, but they are held liable for any benchmarks that they fail to reach during that time.
Depending on the ACO’s performance in meeting the benchmarks set by CMS, they would either receive savings, which would be shared among the various members of the ACO, or if they failed to meet the benchmarks, the entire group would be penalized with lower Medicare reimbursements.
Dr. Berwick brought up the issue of HMOs, which were developed to provide shared savings but have fallen far short of expectations, in his article stating, “We know that not all previous efforts at developing a model of shared savings have met expectations.”
One issue that has doctors concerned is the fact that groups are not eligible to form ACOs unless they have at least 5,000 Medicare patients. Many doctors believe that this will result in an inability for doctors that practice in rural areas from forming ACOs as they likely will not meet the patient threshold. As with all of its proposed rules, CMS is leaving a 60 day window for comments before it issues the rule in its final form later in the year.