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New ACO Guidelines: A Healthcare Reform Milestone?

Yesterday, HHS Secretary Kathleen Sebelius and CMS Administrator Don Berwick held a much anticipated con call to announce proposed rules on the formation of Accountable Care Organizations, or ACOs.  Sometimes referred to as the “unicorn” of health reform (everybody’s heard of it, nobody’s seen one), ACOs refer to a new model for healthcare organizations that creates integrated networks of physicians and hospitals that will each be its own enterprise, sharing responsibility for caring for a population of patients. The goal is to provide coordinated care that will result in improved quality of care, better outcomes and cost savings. According to the HHS, ACOs could save Medicare up to $960 million in its first three years.

As Dr. Berwick explained, “An ACO will be rewarded for providing better care and investing in bettering the health and lives of patients. ACOs are not just a new way to pay for care. They are a new model for the organization and delivery of care. [ACOs] are designed to lift the burden of fragmented and disconnected care from patients, while improving the partnership among patients, doctors, hospitals and other providers of care in making health care decisions.”

Still open to a 60-day public review cycle and possible change, the rules go into effect in January 2012, and are aimed at partnerships of primary care doctors, specialists and hospitals providing care to 5,000 or more Medicare beneficiaries over a period of three or more years. (In theory, ACOs could be a model for the entire healthcare system). A brisk 429-page read,  the proposed rules outline 65 quality measures (pgs. 174-194) that ACOs must meet in five key quality “domains”:
•    Patient/caregiver care experiences
•    Care coordination
•    Patient safety
•    Preventative health
•    At-risk population/frail elderly health

They also outline how financial incentives would work. ACOs would be bonused on meeting government-set quality goals and financial savings (against a calculation of how much a Medicare patient should “cost”) while also sharing in the risk if they do not meet targets.  Berwick summarizes that there will be two “shared responsibility” options for ACOs: “In the first model, ACOs earlier in their evolution can elect to assume a smaller share of upside gains but no risk of loss for 2 years and then transition in year 3 to accepting risk. In the second model, organizations that are willing to take on both upside gains and downside risk can qualify for a higher proportion of shared savings from the start.”

Many Schwartz Communications clients stand to benefit from the successful adoption of the ACO model and are eagerly awaiting further details.  These are companies that have promising IT-based solutions for population health management, clinical decision support, care coordination, preventative health and wellness, chronic care management, health information exchange and analytics – all areas that are at the heart of the ACO concept. They represent a microcosm of the healthcare IT industry at large. However things turn out with ACOs, one thing is clear, transforming healthcare to be more patient-centered, cost-efficient, coordinated and based on outcomes (versus procedures) will be a great step in the right direction toward meaningful reform.


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Doug Russell

Doug Russell

Senior Vice President at MSLGROUP

SVP of MSLGROUP Boston and the lead for healthcare technology efforts.

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