Accountable Care

IHA is pleased to present you with the latest edition of Health Care Reform - Issues and Answers. This paper outlines the proposed regulation on accountable care organizations (ACOs) that was released by the Centers for Medicare and Medicaid Services (CMS) on March 31 (click here to see or download the paper).

Hospitals have been waiting to see the ACO rule as they consider whether participation in the demonstration program would enhance their efforts to improve care coordination, quality and value for their communities. While CMS would like to encourage widespread participation among diverse participants, IHA is concerned that the many issues and challenges presented in the rule will discourage participation. For example:

ACO participants, including hospitals, will have a substantial initial investment, estimated by CMS at $1.7 million per ACO.
Since Medicare beneficiaries will be assigned to ACOs at the end of the year, ACOs will not be able to monitor the quality or cost savings related to those who are assigned to them. ACOs will have to wait more than a year for data because claims data will not be complete until well after the end of the calendar year.
Early discussion about the rule suggested that there would be one track for ACOs where some savings could be shared with an ACO, but the ACO would not have to share the risk for losses during the demonstration. This track would have encouraged participation, particularly given the high start up costs. The proposed rule will require that in the third year of the demonstration, all ACOs will be at risk for losses.
CMS will withhold 25% of ACOs' shared savings payments to offset any potential losses in future years. But if an ACO decides to withdraw from the program, or if it is terminated, it will not be eligible to receive this money. Among the many grounds for CMS to terminate an ACO is falling below a patient population of 5,000 beneficiaries.
There are 65 quality measures being proposed. In order to be eligible for shared savings payments, ACOs must meet minimum standards. They can receive higher or lower payments for based upon the quality scores. In addition to the large number of metrics, these are in the preamble to the regulation and will likely evolve over time.
Finally, from the application through the end of the 3-year demonstration, there are provisions that allow CMS to micro-manage the ACO. This will make it difficult for ACOs to be nimble and quickly make changes needed to maximize their success.

This is a proposed rule with comments due to CMS by June 6. IHA will be vetting the rule with members as we prepare our comments to CMS. IHA also encourages individual members to share concerns with IHA and submit their own comments to CMS.

You will be receiving additional editions of Health Care Reform - Issues and Answers that will include more detailed analysis of the components of this proposed regulation as well as policies of other stakeholder agencies. Today's edition is intended as a concise overview of CMS' proposed rule.

Staff Contact: Ann Guild; 630.276.5496