Revised accountable care organization program draws early praise

December 1, 2011

Urologists and other health care providers now need to consider whether to participate in the federal government's new accountable care organization program, finalized in mid-October as a way to help reduce Medicare costs while improving patient care.

A key provision of the new health care reform law, the ACO program will reward providers who join together to reduce the cost of treating Medicare patients. At the same time, ACOs are intended to improve patient care by better coordinating care among a patient's multiple providers, including hospitals, nursing homes, and other health care facilities.

"ACOs... can represent a very big step forward in helping to transform Medicare, Medicaid, and the Children's Health Insurance Programs so they can help assure high quality, seamless, and less costly health care," said Donald Berwick, MD, administrator of the Centers for Medicare & Medicaid Services, noting that numerous changes have been made in the final regulation in response to provider concerns with the original proposal.

Last December, the AUA and other organizations representing surgeons submitted comments to CMS for consideration as the program was finalized. Some of the key points in that communication included:

Under the final rule, savings will be determined based on a target level of spending that CMS will develop for each ACO for each year.

"Because health care spending for any group of patients normally varies from year to year, CMS will also establish a minimum savings and minimum loss rate that would account for these variations," according to a press release from the Department of Health & Human Services. "Both shared savings and shared losses will be calculated on the total savings or losses, not just the amount by which the savings or losses exceed the minimum savings or loss rate. In addition, the amount of shared savings would depend on how well the team of providers performs on the quality measures specified in the rule."

Two shared savings options offered

Two options for participating in the Medicare Shared Savings Program (MSSP) will be available to ACOs: one in which providers only share in savings that are achieved and one in which they also would share in losses if costs increase. Unlike the original plan, ACOs that participate in the first option can do so for the entire length of their first agreement period and receive up to 50% of savings achieved. In the option in which they agree to share in any losses, ACOs could receive up to 60% of savings, depending on quality performance.

The rule also includes an advance payment model intended to determine whether paying a portion of an ACO's future shared savings in advance will increase participation from physician-owned and rural providers for help with launching their ACO. Those advance payments will be recouped as savings are achieved. CMS said $170 million would initially be made available to help with ACO start-ups.

Also implemented in the new rule is a rolling application process intended to allow more time for practices to prepare and to join, as well as elimination of a requirement that linked implementation of electronic health records to ACO eligibility.

Other concessions by CMS in the final rule include:

"The magnitude of change from the proposed rule to this final regulation justifies serious reconsideration of program participation," Chas Roades, chief research officer at the Health Care Advisory Board of the Advisory Board Co., a consulting firm, wrote in the Oct. 24 edition of The Daily Briefing. "Although the program's fundamental structure remains the same as in the proposed rule, Health Care Advisory Board analysis indicates that the changes to MSSP are significant enough to warrant a second look. In particular, the final rule is likely to be far more appealing to physicians."

CMS estimates that between 50 and 270 ACOs will be formed in the next 3 years, affecting the care of two million of the 47 million Medicare beneficiaries. The administration estimates that ACOs could save the government up to $940 million from 2012 through 2015.

Bob Gatty, a former congressional aide, covers news from Washington for Urology Times.