Final ACO rules satisfy industry

The final rule for accountable care organizations (ACOs) may ultimately be viewed as a great achievement for HHS Secretary Kathleen Sebelius (foreground) and then CMS Administrator Donald Berwick, MD, (back left), especially if ACOs become central to the future of U.S. healthcare.

WASHINGTON – The final regulations for accountable care organizations (ACOs), released in October by the Centers for Medicare & Medicaid Services, were a bit surprising, as they contained major revisions from the draft regulations announced earlier in the year.

The draft regulations, released in March, drew a firestorm of criticism from many quarters, including complaints from provider organizations that they would not share enough in the savings created by an ACO. Providers were unhappy with a long and ill-defined list of 63 quality measures an ACO would need to meet in order to qualify for performance bonus payments, as well as retrospective assignment of Medicare beneficiaries to ACOs.

Writing in the New England Journal of Medicine, CMS administrator Donald Berwick, MD, noted that changes to the draft regulations “create a more feasible and attractive on-ramp for a diverse set of providers and organizations to participate as ACOs.”

The modifications came as a result of a strong and voluminous outpouring of more than 1,300 comments on the draft regulations. Some of the more significant changes included:

• Providers will not be required to share downside risk in order to participate in an ACO, and will be able to earn revenue sharing based on ACO savings earlier as opposed to Medicare retaining all the initial savings;

• Quality measures that ACOs will have to meet to qualify for performance bonuses have been reduced to 33 from 65;

• Community health centers and rural health clinics, which were not allowed to form ACOs in the draft proposal, will be allowed to lead ACOs;

• The ACOs will also be told up-front which Medicare beneficiaries are likely to be part of their system as opposed to not knowing which patients were in the ACO until the contract ended.

CMS estimates that the total cost starting-up an ACO will be in the $29 million to $157 million range. Annual operating costs are estimated to be in the $63 million to $342 million range.

Reactions to the revisions across the healthcare industry have been generally positive.

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