Key elements of ACO program overhaul

Dec 27, 2018
The Bottom Line

CMS finalized a rule with new requirements for accountable care organizations (ACO) last week, reducing the amount of time an ACO is allowed to stay in the program without assuming risk and expanding the three-day stay waivers for nursing homes. “Most Medicare ACOs do not currently face financial consequences when costs increase, but a review of the data on ACO performance shows that over time those ACOs that take accountability for costs perform better than those that do not,” said CMS administrator Seema Verma in a blog post dated December 21, 2018.

Other key elements of the rule include the following:

  • The time an ACO is allowed to remain in the program without taking accountability for healthcare spending has decreased from six years to, at most, three years for new “low-revenue” or physician-led ACOs, two years for all other new ACOs, and one year for existing one-sided ACOs.

  • Physicians are encouraged to form their own ACOs, after smaller, physician-led or “low revenue” ACOs have shown greater success in controlling costs than hospital-led ACOs.

  • Increases flexibility for certain performance-based risk ACOs to encourage innovation and expand access to high-quality services that are convenient for patients, including telehealth services provided at a patient’s place of residence.

  • The shared savings rate for ACOs not assuming risk for healthcare costs is set at 40% and the shared savings rate for ACOs at BASIC track levels of risk is set at 50%.

  • ACOs must provide beneficiaries in an ACO with a written notice in person or electronically through email or a patient portal that they are participating in this new approach to care delivery, and it must also explain what participating in an ACO means for their care.

  • Allows risk-based ACOs to offer new incentive payments to beneficiaries for taking steps to achieve good health such as obtaining primary care services and necessary follow-up care

  • Incorporates regional spending factors in establishing an ACO’s target spending during all agreement periods, providing a more accurate point of comparison for evaluating ACO performance.

CMS is offering an ACO application cycle for a special one-time new agreement period start date of July 1, 2019. The rule is projected to save the Medicare program $2.9 billing over the next ten years.

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