Recently, the U.S. Department of Health and Human Services (HHS) released its long-awaited final rules for Accountable Care Organizations (ACOs) in the Medicare Shared Savings Program (MSSP).

Generally speaking, an ACO is a network of health care providers (typically primary care physicians, specialists and hospitals) that work together to provide and coordinate care for a specified population. The providers collectively take responsiblity for providing and coordinating care for their patients across the full range of medical services. The overarching idea is that ACOs would lower costs while improving care through coordination of services, which reduces things like unnecessary hospitalizations and duplicate tests. The MSSP – considered by some to be one of the ACA’s key cost containment measures – allows ACOs to share savings with Medicare if they improve patient health, shown through meeting specified quality measures, and lower the cost of providing care.

The final MSSP rules lower the bar set by the draft released by HHS last spring, largely to sweeten the pot for doctors and hospitals and get them to participate in the program. (Providers complained vociferously that the draft rules were unworkable and overly restrictive.) Key concessions in the final rules include:

  • More opportunities and less risk for providers The draft rules allowed ACOs to share savings but they were also at financial risk if their costs exceeded what Medicare would have spent without the ACO. In addition, under the draft rules there was a minimum savings requirement before the ACO could get a portion of the savings. Under the final rules an ACO can share in any savings, starting with the first dollar saved. If costs run higher than expected, Medicare will pay the higher costs without collecting anything back from the ACO. The draft rules also held back a portion of any savings to cover possible cost increases in future years but the final rules make the savings available right away.
  • Expanding the eligible pool of potential providers Under the final rules, community health centers and rural health clinics will be allowed to form ACOs. Also, physician-owned practices and rural health providers will be given access to some of the expected savings – $170 million – so that they can use the money to start ACOs.
  • Clarifying which patients are in an ACO The draft rules called for patients to be assigned to an ACO “after the fact,” that is HHS would look at patients who had been treated by a group of providers and determine if there had been any savings. Both providers and patient-advocacy groups stressed the need for up-front clarity on who was actually in an ACO and the final rules reflect that concern.
  • Simpler and less rigorous requirements for start-up and operation, including:
    • — A reduction in the number of quality control measures, from 65 to 33
    • — The elimination of a mandatory review for a new ACO by the Justice Department and the Federal Trade Commission for antitrust issues – any ACO that stays below 30 percent of the market share is unlikely to encounter antitrust scrutiny
    • — The elimination of the requirement that ACOs include consumers in their governing bodies
For a chart outlining additional changes, click here.

Hospitals and doctors generally responded positively to the changes, but paint us “concerned.” On the one hand, we recognize that to have an ACO program, we need providers willing to take part in the program (“what if you threw a party and no one came?”). On the other, lowering the bar in the final rules may result in a program that’s unable to meet its twin goals of better care and lower costs and could affect the cost of care outside the Medicare program. For instance, the current shared-savings arrangement makes cost overruns more likely since ACOs will not be held accountable if spending is higher than expected. Weakening the antitrust provision increases the likelihood that groups of hospitals and physicians could form an ACO with enough clout to allow them to drive up prices to private insurers.

Still, there is room for cautious optimism among consumers. Even with the final rules’ changes, ACOs have the potential to improve health outcomes while bending the cost curve. As The Campaign for Better Care pointed out in its analysis, the final rules retained some critical patient-centered features, including:

  • Patient-Centered Criteria: Care coordination across all settings, a foundation of primary care, new systems to identify high risk patients, and ways to measure the quality of care beneficiaries receive.
  • Patient Experience: ACOs must report on patient experience of care including in areas like shared decision making and how well doctors communicate.
  • Patient Engagement: ACOs must do things like communicate with beneficiaries in ways they understand, promote shared decision making that takes into account beneficiaries’ unique needs and preferences, and allow beneficiaries to easily access their own medical records.
  • Beneficiary Choice of Provider: Beneficiaries are not “locked in” and can see physicians outside the ACO.
These are all important ingredients to a strong program. However, for the program to achieve its full cost-saving, quality-improving potential it will also require ongoing and meaningful consumer involvement in ACO design and governance and strong oversight from the feds. This is especially true for ACOs serving the most vulnerable Medicare beneficiaries: people with multiple chronic conditions and those with disabilities.

Community Catalyst and the advocates we work with across the country will continue to monitor the MSSP as the first ACOs roll out next spring. Only time will tell whether ACOs will live up to their current promise.

— Jo Klemczak, Legal Intern and Renée Markus Hodin, Director, Integrated Care Advocacy Project