New organizations that will shape U.S. health care will save Medicare between $500 million and $960 million in the first three years, the Health and Human Services Department said on Thursday.
Groups wanting to form one of the new Accountable Care Organizations, or ACOs, must be big – able to treat 5,000 patients or more, according to the rules released by the Centers for Medicare and Medicaid Services.
The groups will be purely voluntary, CMS said, and the ACOs will be required to notify patients that they are now part of one. “The patient does not join the ACO, the provider does.… The beneficiary has not lost any choices at all,” CMS Administrator Donald Berwick told reporters.
The organizations are meant to provide carrots rather than sticks to help cut costs. Doctors, therapists, nurses, and other providers who want to form an ACO will be paid extra for keeping patients healthy.
One big criticism of the U.S. health care system is that doctors and other providers get paid for procedures – running a test, prescribing a drug, examining a patient. They are not generally paid for preventing illnesses.
The health care overhaul law is meant to change this approach, by giving porviders' bonuses if patients are healthy under HHS guidelines – although CMS did not give detials of just what those guidelines will be.
The law also aims to improve coordination, so patients do not have to juggle advice and hand-carry records from, say, a cardiologist, to a primary care doctor, a kidney specialist, and a physical therapist.
“ACOs create incentives for health care providers to work together to treat an individual patient across care settings – including doctor’s offices, hospitals, and long-term care facilities. The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while meeting performance standards on quality of care and putting patients first,” CMS explains in one fact sheet.
“For too long, it has been too difficult for health care providers to work together to coordinate and improve the care their patients receive. That has real consequences: Patients have gaps in their care, receive duplicative care, or are at increased risk of suffering from medical mistakes,” HHS Secretary Kathleen Sebelius said in a statement. “Accountable Care Organizations will improve coordination and communication among doctors and hospitals, improve the quality of the care their patients receive, and help lower costs.”
Republicans did not outright condemn the rule, but expressed concern. “It is imperative that sufficient time be given to study and understand the ramifications of these unprecedented, massive regulations,” Sen. Orrin Hatch (R-Utah), Ranking Member of the Senate Finance Committee, said in a statement.
“Any attempt to short-circuit this process would be detrimental to our nation’s doctors and seniors who must know exactly how these hundreds of pages in rulings will impact their delivery and access to high-quality care.”
Republicans accused the Democratic-controlled Congress of rushing through the health care law last year.
Private insurers worried about the antitrust implications. “We remain concerned that ACOs could accelerate the trend of provider consolidation that drives up medical prices and result in additional cost-shifting to families and employers with private coverage,” said America’s Health Insurance Plans’ President and CEO Karen Ignagni.
“However, we appreciate that CMS, the Department of Justice, and the Federal Trade Commission recognize the potential for consumer harm and are taking steps to address this issue with proposed guidelines for evaluating ACOs and their potential impact on consolidation within the marketplace.”
FTC head John Leibowitz said ACOs that are providing improved care for less—and are not simply driving up prices—will enjoy a more lenient enforcement of laws.
“If they meet the CMS eligibility criteria for clinical integration, they are not going to be subject to the most strict kind of anti-trust law enforcement…they will face what’s known as a more lenient rule of reason,” Leibowitztold reporters in a telephone briefing. “We’re going to continue to be vigorous in enforcing antitrust laws…but we’re also committed to making the ACO a system—which really is a brave new experiment—work.”
The new program will be established on January 1, 2012, after public comment.
The proposed rule and joint CMS/OIG notice are posted at: www.ofr.gov/inspection.aspx. Fact sheets are posted at www.HealthCare.gov/news/factsheets/accountablecare03312011a.html.