ACO Final Rules: Key Changes

For Full coverage of the Final Rules, visit www.acoinsights.com)

After months of speculation, and after reviewing more than 1,300 comments on the proposed rules, the Department of Health and Human Services (HHS) released its final rules for Accountable Care Organizations. The first round of applicants will be due in early 2012. According to HHS, the first ACO agreements will start from April through July, 2012, and will have agreements with a first performance “year” of 18 to 21 months. At press time, stakeholders were still sifting through the 700-pages worth of rules, but a number of key changes jumped out.

Risk-reward: Perhaps the biggest change from the proposed rules to final rules deals with the risk-reward of the Medicare Shared Savings Program. Under the proposed rule, an ACO could choose from two tracks, each with a 3-year agreement. The first would have been a one-sided risk model, in which savings only would be shared for the first two years of the three-year ACO contract period. (In other words, the ACO would be shielded from actually losing money during Years 1 and 2.) In Year 3, though, savings and losses would be shared. In the two-sided risk model, savings and losses would be shared for all three years. In the latter model, while the potential for loss exists all three years, the upside potential for shared savings is greater than in Option 1. Option 2 would have provided an opportunity for more experienced healthcare organizations to receive a greater share of savings, but at the risk of repaying Medicare a portion of any losses.

In the final rules, HHS removed the two-sided risk from Track 1. The two tracks would still be offered for ACOs at different levels of readiness, with one providing higher sharing rates for ACOs willing to also share in losses.

“This will help organizations with less experience coordinating care, such as some physician organizations or small or rural providers, to gain experience before taking on the responsibility of sharing losses,” HHS said. “It also allows more experienced providers to take on the responsibility of losses in exchange for greater potential rewards. Accountable Care Organizations may share up to 50 percent of the savings under the one-sided model and up to 60 percent of the savings under the two-sided model, depending on their quality performance.” 

Quality measures: The quality measures have basically been cut in half. The proposed rules called for 65 quality measures in five domains that ACOs would need to meet in order to qualify for performance bonuses. The domains included: patient/caregiver experience of care, care coordination, patient safety, preventive health, and caring for at-risk populations. The final rules have 33 measures in four domains (putting care coordination and patient safety in the same domain). HHS estimates that federal savings could be up to $940 million over four years. 

Beneficiaries: HHS has revised how beneficiaries will be assigned to an ACO. First, ACOs will get at least quarterly updates of the beneficiaries counted toward the ACO by HHS. Beneficiaries will be assigned to an ACO based on how they utilize primary care services, but if they aren’t seeing a primary care physician, then they may be assigned based off of services provided by other physician specialties.