After months of anticipation, the federal government unveiled proposed rules on how providers may establish Accountable Care Organizations.
WASHINGTON-After months of anticipation, the federal government unveiled proposed rules on how providers may establish Accountable Care Organizations (ACOs). The policy encourages doctors and hospitals to form entities that can better coordinate care for fee-for-service Medicare and thus meet quality standards and cut costs. Successful entities will benefit from "shared savings."
Many health plans and hospital groups have been establishing the framework for more coordinated provider initiatives, and a number of state health agencies are looking to lower Medicaid costs through this approach.
While there is general enthusiasm for moving Medicare away from a pay-for-quantity system to one that rewards quality of care, insurers fear the program will encourage further hospital consolidation and thus raise prices. Much of the delay in finalizing the ACO policy stemmed from internal government debate over how to assess potential ACO impact on local markets.
SETTING A FRAMEWORK
The March 31 proposed rule clarifies how the Centers for Medicare and Medicaid Services (CMS) will pay ACOs for providing services covered by Medicare Parts A and B, beginning Jan. 1, 2012. CMS officials are optimistic that a broad shift away from fragmented services and toward more coordinated care will generate some $960 billion in Medicare savings over three years. Even though a previous Medicare demonstration produced minimal gains, CMS Administrator Donald Berwick anticipates that this "more robust model for shared savings" will be more successful.
A broad range of entities are eligible to form ACOs, including physician group practices, networks of individual practices, and hospitals employing physicians, among others. Forming an ACO involves negotiating agreements with providers, creating a governing body and applying to CMS to join the program. CMS emphasizes that providers sign up for the ACO-and not beneficiaries, as under the Medicare Advantage program. Providers then are responsible for informing their patients of the ACO arrangement and that the patient's claims data may be shared with other ACO providers in order to better coordinate care.
To encourage smaller provider organizations to join the shared savings program, CMS is offering low-risk and high-risk alternatives. Those ACOs that are comfortable with risk acceptance can start right out assuming full downside risk as well as upside gains; less experienced provider groups may sign up for a two-year period without risk of loss, along with lower gains from savings, before transitioning to full participation in year three.
CMS will evaluate some 65 quality-performance measures, such as immunization rates, diabetes testing, preventing heart failure and providing care to at-risk patient populations, to see if an ACO meets standards. After the program's first year, CMS will examine data from the previous 12 months to determine whether the organizations should be credited for improving quality of care and reducing expenditures.
Upended: Can PBM Transparency Succeed?
March 6th 2024Simmering tensions in the pharmacy benefit management (PBM) industry have turned into fault lines. The PBMs challenging the "big three" have formed a trade association. Purchaser coalitions want change. The head of the industry's trade group says inherent marketplace friction has spilled over into political friction.
Read More
In this episode of the "Meet the Board" podcast series, Briana Contreras, Managed Healthcare Executive editor, speaks with Ateev Mehrotra, a member of the MHE editorial advisory board and a professor of healthcare policy and medicine at Harvard Medical School. Mehtrotra is also a hospitalist at the Beth Israel Deaconess Medical Center in Boston. In the discussion, Contreras gets to know Mehrotra more on a personal level and picks his brain on some of his research interests including telehealth, alternative payment models and price transparency.
Listen
Inflation Reduction Act: Reforms to Patient Cost-Sharing
September 18th 2023Lower out-of-pocket costs for patients might put upward pressure on drug prices, as manufacturers face less price sensitivity, note Matthew Majewski and Rhett Johnson of Charles River Associates. But they also note that upward pressure on price is likely to be limited to the inflation rate as any additional price increase would need to be paid back to CMS in the form of inflation rebates.
Read More
Spending climbed by 2.7% in 2021. In 2020, it soared by 10.3%, fueled by federal government spending in response to the pandemic. The blizzard of calculations of 2021 healthcare spending by CMS’ actuaries also provides further evidence that utilization of healthcare services bounced back in 2021.
Read More