CMS Issues Final Rule on ACOs, Adding Flexibility for Participation
Background on ACOs
The federal health reform law requires federal health programs to begin contracting with ACOs starting in January 2012.
ACOs aim to lower costs and improve care by fostering cooperation between physicians, hospitals and other providers. HHS estimates that ACOs will save Medicare between $510 million and $960 million during the first three years (California Healthline, 6/7).
Participating providers will be eligible to receive a portion of shared savings (McCarthy, National Journal, 10/20).
CMS released proposed ACO rules earlier this year, giving stakeholders time to comment.
Most of the reactions posted during the comment period were negative. Some organizations argued that the management of ACOs should be simplified. They said that the rule creates too many bureaucratic and legal hurdles and that the number of quality standards will require excessive data management. Other groups worried that potential savings are limited, especially when considering startup costs (California Healthline, 6/6).
Details of Final Rule
According to CMS Administrator Donald Berwick, the final rule incorporates more than 1,300 stakeholder comments and makes a number of improvements that will strengthen the program.
Berwick said, "For example, the final rule will increase the incentives and streamline the Shared Savings Program, extending the benefits of the new program to a broader range of beneficiaries."
Other changes include:
- Expanding participation of rural health clinics and federally qualified health centers;
- Lowering from 65 to 33 the number of quality metrics health care providers must meet to qualify for performance bonuses; and
- A more flexible application timetable, which allows providers to seek ACO status through 2012.
HHS also launched a complementary program -- the Advance Payment model -- that will experiment with whether prepaying a portion of potential future savings will encourage ACO participation and whether advance payments will help providers improve care and reduce costs more quickly (CMS release, 10/20).
Providers Offer Tentative Support for New Rules
Health care providers say they are "cautiously optimistic" about the framework, which aimed to increase flexibility and ease quality measure reporting requirements, CQ HealthBeat reports (Norman , CQ HealthBeat, 10/20).
In a statement from American Hospital Association President and CEO Richard Umbdenstock, AHA commended CMS for addressing hospitalsâ concerns, noting that "today's menu of ACO options allows America's hospitals to create new models of ACOs on which the transformation of health care delivery is so dependent" (AHA release, 10/20).
In addition, American Medical Association President Peter Carmel highlighted "a number of positive changes" that will encourage physician participation, such as more flexibility on physician use of electronic health records and financial support for physician-owned organizations (AMA release, 10/20).
According to George Roman, the American Medical Group Association's senior director for health policy, the changes likely will generate interest among health care providers "that was severely dampened by the onerous [original] proposed framework" (Kliff, "Wonkblog," Washington Post, 10/20).
AHA and AMA also expressed support for changes announced in a Federal Trade Commission and Department of Justice statement on Medicare ACOs, which reduce the administrative burden and associated cost of compliance by eliminating a mandatory review for the program's largest organizations (Norman , CQ HealthBeat, 10/20).
Insurers, Employers Concerned With Final Rule
Insurance and employer groups expressed concern with the new rules, contending that less stringent antitrust requirements would drive up health care costs, The Hill's "Healthwatch" reports.
According to an America's Health Insurance Plans statement, "The initial regulation created an antitrust screening mechanism that would have protected consumers with a mandatory up-front antitrust review and exclusion for the program for those ACOs facing a legal challenge."
However, the group noted that eliminating the antitrust review "raises concerns that provider market power may not be scrutinized sufficiently."
Meanwhile, the Advanced Medical Technology Association called the new rules a "missed opportunity." According to Ann-Marie Lynch, AdvaMed's executive vice president, "the rule does not address the very real danger of slowing the development of new treatments and cures." She said, "Without certain design elements, the ACO program may have the effect of limiting treatment options and discouraging physicians from adopting new advancements in care" (Pecquet, "Healthwatch," The Hill, 10/20).