HHS Issues ACO Proposal, Calls For Quality Standards

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imageThe U.S. Department of Health and Human Services (HHS) yesterday released proposed new rules to aid physicians, hospitals, and other health care providers in better coordinating care for Medicare patients through Accountable Care Organizations (ACOs). 

Under the proposal, on which HHS will be seeking public comment for the next 60 days, ACOs would handle this process for those patients covered by Original Medicare and not enrolled in Medicare Advantage private health plans. By focusing on the needs of patients and linking payment rewards to outcomes, this delivery system reform, as part of the Affordable Care Act, will help improve the health of individuals and communities while saving as much as $960 million for the Medicare program over a three-year period, according to HHS Secretary Kathleen Sebelius.

“For too long, it has been too difficult for health care providers to work together to coordinate and improve the care their patients receive,” Sebelius says. “That has real consequences: patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes.  ACOs will improve coordination and communication among doctors and hospitals, improve the quality of the care their patients receive, and help lower costs.”

To share in these financial savings, ACOs would, under the proposed rules, be required to meet quality standards in five key areas, including patient/caregiver experiences, care coordination, patient safety, preventive health, and handling at-risk and elderly/frail patient populations. ACOs that do not meet quality standards cannot share in program savings; over time, those that do not generate savings can be held accountable.  The proposed rules also incorporate strong safeguards against the limitation of patients’ care choices by ACOs.

The ACO new program will be established on January 1, 2012.  Before the rules are finalized, the Centers for Medicare & Medicaid Services (CMS), the agency administering the ACO program, will review all comments from the public and may make revisions to the proposal based on such input. CMS has worked closely with other federal agencies, including the Department of Health and Human Services Office of Inspector General (OIG), the Department of Justice (DOJ), the Federal Trade Commission (FTC), and Internal Revenue Service (IRS) to ensure that providers and suppliers have the clear and practical guidance they need to form ACOs without running afoul of fraud and abuse, antitrust, and tax laws. Concurrently with the publication of this proposed rule, a joint CMS and OIG notice and solicitation of public comments on potential waivers of certain fraud and abuse laws in connection with the Medicare Shared Savings Program; a joint FTC and DOJ proposed antitrust policy statement; and an IRS notice requesting comments regarding the need for additional tax guidance for tax-exempt organizations, including tax-exempt hospitals, participating in the Medicare Shared Savings Program, have all been issued.

The proposed rules are just one component of a broader-based initiative by the Obama Administration to improve the quality of health care for all Americans.  On March 21, HHS announced the first-ever National Quality Strategy, which will serve as a tool to better coordinate quality initiatives between public and private partners.  In addition, the Affordable Care Act established a new Center for Medicare and Medicaid Innovation that will test innovative care and service delivery models. CMS is currently exploring how the Innovation Center will test alternative payment models for ACOs. 

The proposed rule and joint CMS/OIG notice are posted at www.ofr.gov/inspection.aspx; the Proposed Antitrust Policy Statement, at www.ftc.gov/opp/aco/. The IRS Guidance and Solicitation of Comments may be found at http://www.irs.gov/pub/irs-drop/n-11-20.pdf.