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High-Profile Healthcare Centers Skeptical of ACO Proposed Rules

Health Reform Update from National Business Coalition on Health

As NBCH and many organizations are preparing to submit comments to HHS on the ACO federal regulations, the nation’s highest-profile health care centers — the Cleveland Clinic, the Mayo Clinic, Intermountain Healthcare or the Geisinger Health System —have so many concerns with the proposed rule to create ACOs that they doubt that they will participate.

The 2010 health care law (PL 111-148, PL 111-152) created the authority to establish ACOs — networks of providers within the Medicare system that include physicians, hospitals and health systems. The aim of the integrated networks is not only to improve the quality of care but also to save money, with any savings to be shared by the government and the ACOs. The Centers for Medicare and Medicaid Services (CMS) released a proposed rule at the end of March that spells out the details of how the program will work, how much financial risk medical providers will face, and what type of data the organization need to collect.

Interviews with officials at integrated care organizations yield a similar reaction to the proposal: The idea behind the Medicare rule is a good one. But there have to be major changes to the details before the program would be workable. Even the most sophisticated health care systems in the nation, which have already adopted a number of the practices that Medicare officials want providers to carry out, say there isn’t enough incentive for them to apply to become an ACO under the Medicare proposal.

But the fact that the even the institutions that were the inspiration for the program are reluctant to participate unless big changes are made shows that CMS officials face a tough task. Officials who are weighing changes to the proposal before they finalize it later this year will have to consider how far they want to go to attract interest. The complaints against the proposed rule are many and multi-faceted.

One basic issue is that all institutions who sign up will face a financial risk if they do not generate savings required by the rule. The proposal suggests a two-track system. Providers could choose to get a bigger financial reward if they subject themselves to penalties starting in the first year. Or they could have the potential of a less generous reward if they choose to wait until the third year of the program to face penalties. Many providers had expected the program to offer a way for institutions to get bonuses without having to face penalties and were disappointed that the rule proposes a potential financial hit for any group that doesn’t find required savings.

Because of all of the concerns, many of the nation’s top integrated care institutions are concluding that the start date of Jan. 1, 2012 needs to be delayed. Health center officials say it will be hard to review the requirements in a final rule, which isn’t expected to be released before late summer at the earliest, meet financial requirements, set up quality metrics and enroll by Jan. 1. (Source: CQ HealthBeat, May 6, 2011)

Read Forbes Magazine article outlining major concerns.

Posted by Cristie Travis at 3:11 PM

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