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Sebelius: HHS Will 'Very Seriously' Consider Criticism of ACO Rule

By Jane Norman, CQ HealthBeat Associate Editor

May 12, 2012 -- Health and Human Services Secretary Kathleen Sebelius acknowledged that a high-profile proposed rule on Medicare accountable care organizations is drawing intense criticism among health care providers who say it needs substantial revision.

"We will take the comments very seriously," Sebelius said during a conference call on Medicare with Rep. Kathy Castor, D-Fla. "As you know, it is a proposed rule, so we're listening closely to health care providers, to hospital groups."

Asked if the negative reaction means it will take longer for the final rule to be developed by the Obama administration, Sebelius didn't rule it out. "It depends, really, on how many comments we get," she said. HHS remains "anxious" to launch its first ACOs by the end of the year, which "has been the goal all along," she added.

The ACO program is a key part of the health care law when it comes to Medicare, and officials with the Centers for Medicare and Medicaid Services (CMS) were so sensitive to the rule's reception that even before it was unveiled in March they produced memos anticipating the volleys that might come its way.

ACOs are regarded by the Obama administration as a key way to increase Medicare quality while lowering costs. The ACOs are networks of providers within Medicare that include physicians, hospitals and health systems. A report CMS released says the voluntary organizations "have the potential to generate significant savings for the Medicare trust fund and allow providers themselves to share in the savings."

CMS released its proposed rule for ACOs in March and opened a public comment period that ends June 6. CMS officials have emphasized they want to work with providers so the ACO program lives up to its potential, and that they want feedback.

That they've gotten, and more is likely on the way since many providers have not yet weighed in. One that has is the American Medical Group Association, a trade association for big multi-specialty medical groups like the Mayo Clinic, which warned Medicare earlier this week that 93 percent of the organization's members say they would not participate under the proposed regulatory framework.

And some of the nation's highest-profile health centers that are considered candidates for the proposal—the Mayo Clinic and Geisinger Health System—doubt they will sign up either. They approve of the principles but say that the regulations are too restrictive and systems are not given enough incentives to participate.
Sebelius said ACOs are an innovative concept designed to encourage patient-centered care, and she said health leaders are receptive to the idea.

"I think there is a lot of enthusiasm throughout the industry and the health care delivery system in finding new ways to deliver care and taking advantage of what people have learned over the years and really capturing the best practices," she said.

Sebelius also said she anticipates developing ACO proposals for different provider categories. One would be for groups that are ready to immediately become ACOs. A second would be for groups interested in becoming ACOs but not are quite ready to go down the path and who would need strategies and technical assistance. A third would be for those who are more than ready and want to move at an accelerated pace.

The CMS report documented how the health care law (PL 111-148, PL 111-152), as well as other CMS initiatives, would strengthen Medicare, lower costs and improve the quality of care received by enrollees.

The report said $120 billion will be saved in Medicare during the next five years, including $55 billion by rewarding quality and efficiency in provider payments, $10 billion through better patient safety, $1.8 billion fighting fraud, waste and abuse, $2.9 billion in tighter standards for durable medical equipment payments and $50 billion in reduced payments to Medicare Advantage plans.

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