Senior Living Business: Health Care Reform: Understanding ACOs

Preparing For An Accountable Care Organization Environment

 In an effort to improve coordination of care and to lower Medicare costs, the Department of Health and Human Services released on March 31, 2011, its proposed rules for Accountable Care Organizations (ACOs), a new health care delivery system conceived through the Affordable Care Act to create incentives for providers to work together and treat patients across care settings. The related Medicare Shared Savings Program will reward ACOs that lower the growth in health-care costs, as long as they meet performance standards for quality of care. While certainly complicated, this new system is an exciting opportunity for providers—regardless of size—and will change the nature of post-acute/sub-acute care as we have known it.
 
 Two important things about ACOs must be kept in mind, according to Kathleen Griffin, President and CEO of Valley Consultants, Inc. of Scottsdale, Arizona, and a consultant with Health Dimensions Group in Minneapolis, Minnesota.

  1. The rules proposed in March will likely undergo significant changes, based on input from providers, other caregivers. and consumers.
  2. The proposed rules were not well received by potential participants for several reasons, including the fairly significant cost of meeting the requirements to become an ACO—estimated by the Centers for Medicare & Medicaid Services (CMS) at about $1.75 million, excluding electronic health and medical records setup. That is a rather onerous threshold for smaller organizations, considering an ROI of only 50-60% of shared savings.

 According to current law, ACOs are scheduled to begin on January 1, 2012. To meet that date, CMS would need final rules in place by sometime in August in order to provide enough time for organizations to prepare applications. If the rules are not finalized that quickly, which is likely, applications for the three-year ACO contract might be accepted on a rolling schedule in 2012.

Who can become an ACO participant?
According to the proposed rules, an ACO participant may be any of the following: 

  • • A hospital or health-care system that employs an adequate group of physicians, nurse practitioners, and physician assistants;
  • • A critical access hospital that, by arrangement with its physician partners, does all the billing for both the physicians and the hospital services;
  • • Physicians in a group practice arrangement;
  • • A network of physician practices, many of which have been put together by hospitals; or
  • • A partnership or joint-venture arrangement between the professionals (whether a group practice or a network) and a hospital or multiple hospitals.

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