On March 31, 2011 the Centers for Medicare & Medicaid Services (“CMS”) released the much-anticipated proposed regulations for the creation of Accountable Care Organizations (“ACOs”), which were published in the Federal Register on April 7. ACOs are a key component of the Patient Protection and Affordable Care Act (“PPACA”) and are referenced in PPACA as part of the Medicare Shared Savings Program. Section 3022 of the Patient Protection and Affordable Care Act, Pub. L. 111-148 (Mar. 23, 2010), codified at 42 U.S.C. 1395jjj. Following the launch of the ACO program on January 1, 2012, CMS expects 5 million Medicare beneficiaries to eventually receive care through an ACO.
ACOs are coordinated healthcare delivery systems in which provider reimbursements are tied to quality measures and overall reductions in the cost of healthcare. In theory, ACOs will be able to maximize value by using a patient-centered team approach to care. In the ACO model, providers regularly communicate and collaborate on various aspects of patient care, ensuring continuity and consistency in care delivery. This approach stands in stark contrast to many current delivery models in which providers operate in silos, often creating disjointed or uncoordinated patient care.
Structurally, an ACO will consist of a group of healthcare providers – physicians, physician groups, hospitals, and other suppliers of health services or provisions – contracting with each other and with CMS to provide comprehensive care for patients. While providers will still receive Medicare fee-for-service payments, the ACO will share in any savings it achieves for the Medicare program. At the same time, however, ACOs would be liable for any losses to Medicare. This “blended” reimbursement model eliminates incentives for overutilization inherent in a traditional fee-for-service system, yet also disincentivizes underutilization because some fee-for-service reimbursement remains.
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