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123 New ACOs Begin Operating; CMS Seeks Provider Input

Posted in Accountable Care Organizations, Affordable Care Act, Home Healthcare, Hospitals and Institutions, Legislation and Public Policy, Medicare and Medicaid, Private Insurers, Reimbursement Matters, State Matters

On January 1, 123 new Accountable Care Organizations (ACOs) began participating in the Medicare Shared Savings Program (MSSP), established under the Patient Protection and Affordable Care Act. In a press release, the Department of Health and Human Services (HHS) said that over 5.3 million Medicare beneficiaries now have access to the more than 360 ACOs that are currently participating in the MSSP, some since April 2012.

An ACO, defined broadly, generally consists of physicians and other healthcare providers, one or more hospitals, community health centers or clinics, and sometimes a commercial insurer in a given regional area that organize to provide coordinated care. More than 500 ACOs have been formed to date and hundreds more are expected to begin operating within the next two years. Those ACOs that elect to contract with HHS for a three-year term are eligible to share in any savings generated by lowering healthcare costs to Medicare beneficiaries, so long as numerous standards for quality of care are met. Beneficiaries are assigned to one ACO but are free to choose doctors inside or outside of the ACO.

The application deadline for potential new participants in the MSSP beginning January 2015 will be some time this summer. More information about the MSSP is available here. The new group of ACOs includes several that had dropped out of CMS’s Pioneer ACO program last year. The Pioneer program, which offers early-adopter ACOs the chance to receive a larger share of cost savings in exchange for assuming additional risk, lost nine of its initial 32 participants that were unable to produce the cost savings they had hoped for.

Separately, on December 20, the Centers for Medicare & Medicaid Services’ Innovation Center released a Request for Information (RFI) seeking input on how to encourage participation in an expected second round of the current Pioneer ACO model, and on possible new ACO models to “encourage greater care integration and financial accountability.” Responses to the RFI are due by March 1.

In its Fall 2013 Economic Outlook, Premier, Inc., a leading healthcare improvement company, reported that more than 75% of hospital respondents plan to participate in some type of ACO eventually. However, due to the large upfront technology and personnel costs of establishing an ACO, the providers most likely to do so are those that are part of a larger healthcare system and located in a non-rural area. Less than 25% of all U.S. hospitals are currently part of ACOs.

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