CMS unveils long-awaited ACO framework

CMS on Thursday released its proposed rule to govern accountable care organizations (ACOs).

As called for by the federal health reform law, the ACO program is intended to encourage networks of providers to collaborate on care for Medicare beneficiaries, with the aim of improving outcomes and reducing cost. Participating providers will be eligible for a portion of shared savings.

In a conference call, officials estimated that ACOs will save Medicare as much as $960 million over the model's first three years. They also reiterated that organizations that seek to become ACOs must treat at least 5,000 patients.

Agency lays out two models—and both include potential downside

Writing in NEJM as an accompaniment to the release, CMS Administrator Don Berwick explained a pair of proposed models for ACOs:

  • Model for ACOs that are "earlier in their evolution:" CMS will allow these organizations to assume no risk of loss—but a smaller share of bonus payments—for the first two years, before transitioning to accepting risk in year three.
  • Model for organizations willing to take on greater risk: CMS will allow these ACOs to qualify for a higher proportion of savings "from the start," but these organizations face the possibility of penalties for exceeding spending targets right away.

Berwick added that CMS' new Center for Medicare and Medicaid Innovation is examining potential alternative ACO models.

However, forcing all ACOs to accept some risk within the first three years is a "big surprise," according to CQ HealthBeat, as many analysts expected this to be an eventual goal for the program—and not a feature from the start.

More quality standards for providers

Berwick also reiterated that ACOs must ensure that patients and providers have the right information at the point of care, and stressed that participating organizations will be held to "rigorous quality standards." CMS has proposed 65 quality measures, which span five domains—care coordination, patient experience, patient safety, preventive health, and metrics of quality of care for frail, elderly and at-risk populations—and stress that ACOs must adopt a "proactive…orientation."

Scrutiny of anti-trust further explained

According to Modern Healthcare, the success of the ACO program may hinge on whether participating providers are allowed flexibility from federal anti-trust scrutiny. CMS officials said the proposed rule, which was crafted in close consultation with the Department of Justice (DOJ) and Federal Trade Commission (FTC), addresses those concerns for providers in Medicare ACOs.

On the conference call, DOJ and FTC officials elaborated on their planned approach to scrutinizing anticompetitive behavior among ACO participants. "[We are] committed to making the ACO systems work," according to FTC Chair Jon Leibowitz, who said his agency would evaluate potential ACOs within 90 days to determine if they would violate anti-trust laws. According to a DOJ official, a new safe harbor also was created for organizations participating in the program with less than 30% of market share.

Timeline ahead of implementation

CMS will accept comments on its proposed rule—which has been posted to—for 60 days. The agency says it will respond to comments in a final rule to be issued later this year and before January 2012, when the shared savings program is slated to go live as mandated by the federal health reform law.

Meanwhile, the FTC's Proposed Antitrust Policy Statement is posted to

(CMS factsheet, 3/31; Berwick, NEJM, 3/31; Reichard, CQ HealthBeat, 3/31 [subscription required]; Galewitz, Kaiser Health News, 3/31; McCarthy, National Journal, 3/31; Daly/Zigmond, Modern Healthcare, 3/31 [subscription required]).

Next in the Daily Briefing

Report highlights 'bizarre' disease clusters in 13 states

Read now