HHS Outlines Rules for Accountable Care Organizations

  • Originally published April 11, 2011 , last updated January 7, 2016
HHS Outlines Rules for Accountable Care Organizations

HHS Outlines Rules for Accountable Care Organizations

The Department of Health and Human Services (HHS) has issued a 429-page proposal laying out the details of the accountable care organization (ACO) regulations introduced in the Affordable Care Act (PPACA).

Download summary here

What is an Accountable Care Organization?

ACOs will be networks of hospitals and doctors that will be jointly accountable for the care of at least 5,000 Medicare patients—with the end goal of making care more efficient, making patients healthier and saving money at the same time. Federal officials predict these entities could shave as much as $960 million off of federal Medicare spending between 2012 and 2015.

The proposal, which is slated take effect January 2012, currently only applies to Medicare, but could be expanded to include Medicaid and the private market in the future.

Here’s how it works: An ACO is basically a team made up of all the different components of a patient’s care, including primary care, specialists, hospitals, nursing homes, home health care, etc. The idea is to not only make it easier for these teams to work together and communicate, but also give them a monetary incentive to do so. By coordinating care as a team, rather than a bunch of disconnected pieces of a puzzle, the goal is to avoid duplicating efforts, unnecessary procedures, etc. The teams that meet care affordability and quality goals will be eligible for federal monetary rewards.

“Bending the Cost Curve”

While previously implemented measures of the PPACA focused more on providing access to affordable care, the ACO proposal aims to “bend the cost curve”—that phrase we heard so much about during the health care debate, which is basically just a fancy way of saying cut costs.

Above we quoted the estimate that ACOs could cut as much as $960 million from federal Medicare spending in the first three years. To put that in perspective, that’s less than 1% of Medicare spending over that period.

HHS estimates that between 1.5 to 4 million Medicare beneficiaries would be covered by ACOs initially, and that between 75-150 ACOs could be created.

Questions linger about:

Anti-trust ramifications – A joint statement from the Justice Department and the Federal Trade Commission says that “under certain conditions, accountable care organizations could reduce competition and harm consumers through higher prices or lower quality of care.”

How will this affect your clients? – Patients will not initially sign up for an ACO, but if their most frequently used primary care provider is part of such a group, at the end of year they will automatically be assigned to that ACO for the subsequent year. Patients would be required to be notified of their physician’s participation and could opt out by selecting a different doctor.

What does that mean to seniors? Fewer choices of providers and an emphasis on preventive care. Tightly managed HMOs just got a major shot in the arm.