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Final ACO Regulations Released

Earlier today, HHS released the final regulations for Medicare Accountable Care Organizations. Back in March, a proposed rule was released for stakeholder review. HHS received more than 1,300 comments on the proposed rule asking to increase incentives, streamline the Shared Savings Program, and extending the benefits to a broader range of beneficiaries. The final regulations establish two initiatives, the Medicare Shared Savings Program and the Advance Payment Model. Estimates show that these initiatives could save the federal government up to $940M over four years.

Medicare Shared Savings Program

This will provide incentives for coordinating patient care by allowing providers to share savings if they meet certain quality standards for patient outcomes and care coordination. Each year, CMS will develop target spending levels for ACOs. “One-sided” ACOs will share up to 50% of any savings they achieve compared to target spending. “Two-sided” ACOs will share up to 60% of the savings, but will also be accountable for losses. In order to determine savings, ACOs will be evaluated over 33 quality measures within four domains: Patient experience, care coordination and patient safety, preventive health, and caring for at-risk populations.

Unlike managed care plans, Medicare beneficiaries will not be restricted to certain providers in an ACO. The ACO providers are responsible for coordinating the patient’s care if that person receives most of their primary care services from the ACO.

All Medicare providers can participate in ACOs, but only physicians in group practice arrangements, networks of individual practitioners and hospitals partnering with/employing physicians, NPs, PAs and specialists may sponsor an ACO. Each group must be accountable for at least 5,000 beneficiaries over three years and must include healthcare providers and Medicare beneficiaries on its governing board.

Advance Payment Model

This will provide initial funding for physician-owned and rural providers who require start-up resources to create an ACO (such as new staff or IT). The advanced payments will later be paid back with future shared savings achieved by the ACO. Provider groups may receive fixed payments, upfront payments based on the number of Medicare patients, or monthly payments based on the number of Medicare patients.

Applications to develop ACOs are due by January 1, 2012. Projected ACO start dates are April 1 and July 1.

For more information, see this HHS fact sheet.