Final Rule Changes to Medicare ACOs

Final rules for Medicare Accountable Care Organizations were announced by the Department of Health and Human Services on Thursday to encourage health care providers to work together in order to share in savings.

“Today we have taken another step to improve health care for people with Medicare,” Sebelius said. “We are excited to give doctors, hospitals and other providers the flexibility and support they need to work together and focus on making sure patients get the care they need.”

Through the Medicare Shared Savings Program, the higher the quality of care providers deliver, the more shared savings they can keep.

There are four domains where providers will need to meet certain quality standards: patient experience; care coordination and patient safety; preventive health; and caring for at-risk population. Overall, federal savings could be up to $940 million over four years.

Physician-owned and rural providers participating in the Medicare Shared Savings Program will receive additional support with the Advance Payment model. Participants can access their savings up front to make investments in infrastructure.

Providers can receive payments as an upfront fixed payment, or as an upfront or monthly payment based on the number of Medicare patients served.

“This model of delivering care may not be right for everyone, but it provides new incentives for doctors, hospitals, and other health care providers to work together in new ways,” said HHS Secretary Kathleen Sebelius in a statement.

Other changes from the proposed rules include making the one-sided model truly one-sided. Originally, the one-sided shared savings model required ACOs to share losses in the third year, but the final rule allows ACOs to participate in a one-sided savings-only model for the duration of the agreement.

The changed rule means that organizations new to coordinating care won’t have to take on the responsibility of sharing losses, while more experienced organizations take on the losses in exchange for greater potential rewards

Edit 10/21/11: Read about reactions from various industry organizations.

Two initiatives were launched providing new incentives for providers. The programs incentives encourage health care providers to work together to treat a patient across settings.