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Proposed Rule on ACOs Is Looming, Says Medicare Administrator

By Rebecca Adams, CQ HealthBeat Associate Editor

February 1, 2011 -- A proposal outlining the Obama administration's preferred ground rules for new accountable care organizations should be out within a month, says Donald M. Berwick, administrator of the Centers for Medicare and Medicaid Services.

And Berwick signaled that he may fund other experiments in coordination of care through the new Center for Medicare and Medicaid Innovation.

The health care law (PL 111-148, PL 111-152) called for CMS officials to fund a limited number of so-called accountable care organizations (ACOs), which are groups of health care providers who agree to be accountable for the quality, cost, and care of Medicare recipients. The ACOs could take a variety of forms, such as networks of physicians or partnerships between hospitals and physicians. These new groups would test out the concept by agreeing to care for at least 5,000 people for three years or longer. If an ACO saved money, then the medical providers who are part of the group would share in the savings.

Berwick declined to spell out what the proposed rule on ACOs will say, but he acknowledged that federal officials will have to sort through complicated and contentious issues. "It's going to be tough," Berwick said.

Among the potential questions that Berwick foresees:

  • How will the quality of care for patients be measured? As Berwick noted, if measurements are too stringent, then fewer providers will be interested in participating.
  • How will antitrust laws be relaxed so that providers can cooperate without being accused of monopolistic behavior?
  • What kind of financial risk will providers have to assume in order to form an ACO?
  • How can CMS officials make sure that the ACOs don't cherry-pick and recruit the healthiest patients to be part of a group, leaving sicker patients out of the network?
  • How will patients be assigned to an ACO? Berwick said that the "law presumes choice," but it doesn't spell out the details of how seniors can join or be assigned to an ACO.
  • When different medical groups join together, how can providers make sure that they're protecting patients' privacy?
  • How can small practices get the capital to operate an ACO?

Berwick warned that he is looking for proposals that will represent significant shifts in how patient care is coordinated so that providers are really collaborating in a new way that respects patients' preferences.

"Parties will be out there who will wish to repackage the status quo. I don't think that will be enough," he said. "We're going to have to find a way to deliver care better. That means change."

As Berwick searches for the best models of coordinated care, the innovation center may separately fund what he called "pioneering" organizations that began working on such efforts without waiting for health law rules governing ACOs to be written. Groups funded by the innovation center aren't expected to have to adhere to the new ACO regulations.

Officials with the innovation center—which has been operating for two months and funded four major grants so far—are in the midst of a 60-day strategic planning process. Federal officials are coming up with a list of the type of projects that they want to support through federal financing. In remarks to reporters after the Brookings briefing, Berwick gushed about the structure of the innovation center, saying that it "allows us to move faster" than officials can by using the rulemaking process and can "invite reforms of exploration that wouldn't be possible" otherwise.

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