KHN Morning Briefing

Summaries of health policy coverage from major news organizations

HHS Unveils ACO Details

During a Thursday morning press call, Health and Human Services Secretary Kathleen Sebelius and Centers for Medicare and Medicaid Services Administrator Donald Berwick unveiled the long-awaited federal rule on accountable care organizations. A fact sheet from the CMS Office of Media Affairs detaling ACO specifics explains that "ACOs create incentives for health care providers to work together to treat an individual patient across care settings – including doctor's offices, hospitals, and long-term care facilities. The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting patients first. Patient and provider participation in an ACO is purely voluntary."

Here's the proposed rule:

Kaiser Health News: "The Obama administration today released proposed rules to help hospitals and doctors form a new type of health care delivery system called accountable care organizations, and officials said they estimated the ACOs could save Medicare up to $960 million over three years. ACOs, being established in the Medicare program under the new health law, have been billed by top federal health officials as a way to help providers work more closely together and lower costs. But critics worry ACOs could give too much power to hospitals and doctors and increase costs. While the ACO program would start in Medicare, most health experts say it quickly will be adopted by private insurers" (Galewitz, Rau and Vaida, 3/31). Also, watch a new Kaiser Health News video, Understanding The New HHS ACO Rule, which features KHN staff writer Jordan Rau and KFF's Jackie Judd; or check out KHN's ACO resource page, which includes links to the proposed rule and Department of Health and Human Services fact sheets. 

Bloomberg: "Hospitals, insurers and groups of doctors will be able to form networks with the aim of cutting health-care costs by pooling services under regulations the Obama administration released. ... The program may save the government as much as $960 million in the next three years after any performance incentives are paid to providers" (Wayne, 3/31).

The Hill's Healthwatch: "The proposed rule will enable medical providers to share in Medicare savings if they collaborate to limit duplicative tests, needless procedures and other inefficiencies caused by Medicare's fragmented payment system for medical care. ... Provider groups who cover at least 5,000 beneficiaries will be eligible to start an ACO. The regulation is only a proposed rule, and officials said they'd be holding listening sessions over the next few months to make any changes that are needed" (Pecquet, 3/31).

Modern Healthcare: "Officials... emphasized that Medicare patient participation in these new entities will be voluntary. ... Among the key factors that will determine the success of ACOs is the amount of new protection that participating providers are given from federal antitrust laws. Administration officials expect regulations will address that concern for providers in Medicare ACOs. However, it remains unclear whether such protections will extend to non-Medicare patients included in ACOs" (3/31).

The Associated Press:  The Obama administration on Thursday outlined a new approach to medical care that it said could mean higher quality and less risk for patients, while also saving millions of dollars for taxpayers. The plan involves accountable care organizations, which are networks of hospitals, doctors, rehabilitation centers and other providers. They would work together to cut out duplicative tests and procedures, prevent medical errors, and focus on keeping patients healthier and out of the emergency room. ... If things work out, medical providers would share in the savings. If the experiment fails, they're likely to get stuck with part of any additional costs.(Alonso-Zaldivar, 3/31).

National Journal: "HHS said that the rules will ensure that patients do not have their care choices limited by an ACO. 'If ACOs save money by getting beneficiaries the right care at the right time – for example, by improving access to primary care so that patients can avoid a trip to the emergency room – the ACO can share in those savings with Medicare,' HHS said. The new program will be established on January 1, 2012, after public comment" (McCarthy, 3/31).

The New England Journal of Medicine published a column from CMS chief Berwick: "The creation of ACOs is one of the first delivery-reform initiatives that will be implemented under the ACA. Its purpose is to foster change in patient care so as to accelerate progress toward a three-part aim: better care for individuals, better health for populations, and slower growth in costs through improvements in care. Under the law, an ACO will assume responsibility for the care of a clearly defined population of Medicare beneficiaries attributed to it on the basis of their patterns of use of primary care. If an ACO succeeds in both delivering high-quality care and reducing the cost of that care to a level below what would otherwise have been expected, it will share in the Medicare savings it achieves" (3/31).

Berwick offered more information about ACOs on a post to The White House Blog.

Earlier, related Kaiser Health News coverage:  FAQ On ACOs: Accountable Care Organizations, Explained (Gold, 1/13).

And, for the lighter side of these ACO developments, watch this youtube video: In Search Of An Accountable Care Organization

This is part of the KHN Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.