Skip to main content

Advanced Search

Advanced Search

Current Filters

Filter your query

Publication Types



Newsletter Article


Medicare Officials Prepare to Issue Proposed Changes to ACOs

By Rebecca Adams, CQ HealthBeat Associate Editor

September 29, 2014 -- The Centers for Medicare and Medicaid Services will soon release a rule updating the main program that pays groups of hospitals and doctors that coordinate patients’ care through accountable care organizations (ACOs), a top agency official said Monday.

CMS Deputy Administrator Sean Cavanaugh told insurance industry executives gathered at a conference sponsored by the America’s Health Insurance Plans trade group that the so-called “shared savings” program will be modified through a proposed regulation. When asked for more information after the briefing, he did not elaborate.

The accountable care organization payment model has been encouraged by CMS officials through the Medicare shared savings program and through demonstration projects like the Pioneer program through the CMS Center for Medicare and Medicaid Innovation.

Contracts under the program are in their third and final year. Hospitals, physicians, other providers, and insurers are anxious to see what types of changes may be underway for the next phase of the program.

About 4.9 million people in Medicare are covered by ACOs in the program.

One question is whether CMS officials will adjust quality metrics. Current measures often focus on whether certain processes or procedures have been done, rather than the actual outcome of treatment, providers complain. Providers say the data is costly to report and often doesn’t reveal whether patients get better care under an ACO than in traditional fee-for-service Medicare.

“There is a consensus that the number of quality metrics need to be reduced,” said University of Southern California Chair in Medicine and Public Policy Paul Ginsburg.

Payments for the ACOs also might change. Now that the ACOs have held down spending, CMS officials might be tempted to ask groups participating in ACOs to lower spending more.

Ginsburg said he would be concerned if CMS officials changed the original benchmarks for payments, which are based on historical spending and national trends, and asked ACOs to significantly reduce spending further.

“That would be a disaster because it would greatly undermine the business case from the ACO perspective,” said Ginsburg. “If ACOs reduced that spending, you don’t want CMS to take it from them right away. If they invested a lot of money to coordinate care, you want them to have a number of years of benefit so they can get a positive return on investment.”

The proposed updates come as another ACO program run through the Innovation Center faces a decline in participation. The Pioneer program incentivized providers to participate in ACOs but those that don’t achieve their goals face financial penalties by CMS. As organizations have realized that they could be penalized for participating, several have switched from the Pioneer program to the shared savings program, which is a better deal financially for them.

The number of ACOs in the Pioneer program has fallen from 32 ACOs three years ago to 19 currently.

However, the shared savings program has grown from 27 organizations in 2011 to 338 this year.

Publication Details