CMS Releases Proposed Rule for Creation of Medicare Accountable Care Organizations

By: OSD Staff

Published: 3/31/2011

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Proposal outlines how ACOs can form legally and become eligible for shared savings.


A framework for the establishment of accountable care organizations (ACOs) is finally coming into view one year after passage of the healthcare reform law that called for the creation of coordinated provider networks. The U.S. Department of Health and Human Services today released the first draft of its proposed regulations governing the shared savings program for Medicare ACOs, which is scheduled to debut in January 2012.

The 429-page draft explains how ACOs will create incentives for doctors, hospitals, long-term care facilities and other providers to better coordinate their care of individual patients, cutting costs and improving efficiency in the process.

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

Specifically, groups of Medicare providers that join forces to establish ACOs and coordinate their care of original Medicare beneficiaries (not those with Medicare Advantage plans) will be eligible for shared savings when they show they are meeting quality standards in 5 areas:

  • patient/caregiver care experiences;

  • care coordination;

  • patient safety;

  • preventive health; and

  • at-risk population/frail elderly health.

    In addition to laying out a framework for how ACOs will operate and qualify for savings, the proposed rule also "includes protections to ensure patients do not have their care choices limited by an ACO," says HHS. Various federal agencies, including HHS, the Department of Justice and the Federal Trade Commission, have worked together to provide guidance for providers on how to form ACOs that do not violate fraud and abuse, antitrust and tax laws. For more on that guidance, see the FTC's proposed "Antitrust Enforcement Policy Statement" regarding Medicare ACOs.

    And for more information on Medicare accountable care organizations, see the full proposal or this more concise HHS fact sheet. CMS is currently taking public comments on the proposal, which it will review and the make changes based on feedback before finalizing the rule.

    Irene Tsikitas

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