To Be An ACO, Or Not To Be

Karen Minich-Pourshadi, April 4, 2011

After much anticipation, the public comment period on the proposed Accountable Care Organization regulations from the Centers for Medicare & Medicaid Services began last week. The release of the proposed regs prompts me to ask: Are the potential cost savings worth the effort to establish an ACO, and if so, is now the time to set one up?

These aren’t simple questions to answer.

Donald Berwick, MD, the CMS administrator said in a March 31 perspective published in theNew England Journal of Medicine that the purpose of ACOs is to foster changes in patient care so as to accelerate progress toward:

  • Better care for individuals
  • Better health for populations
  • Slower growth in costs through improvements in care

Should your facility jump on the bandwagon? The answer is likely yes, but you may want to do so with optimistic trepidation. Here are few areas to keep in mind:

Details of an ACO

An ACO is an organization whose primary care providers are accountable for coordinating care for at least 5,000 Medicare beneficiaries. CMS will grant groups of Medicare providers the ability to share in cost savings if they create an ACO.

CMS will require ACOs to report metrics on their clinical processes and outcomes, patient experience, utilization, and costs - - all of which will be calculated to create a per-member cost for treatment in a given timeframe. This figure would be compared to benchmarks the government will establish based on rolling averages of per-beneficiary costs for the ACO, plus an adjustment to account for national expenditure growth.

Now, if the ACO meets the quality and patient perspective benchmarks, and manages to exceed a minimum savings threshold (also set by CMS), then the participating hospitals or health systems will be able to share savings with Medicare. How the money will be distributed among the participants of the ACO is based on the patient’s utilization of services within the ACO. Currently, the proposed regulations do not specify how much the incentives for providers will be.

Karen Minich-Pourshadi Karen Minich-Pourshadi is a Senior Editor with HealthLeaders Media. Twitter
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