Healthcare executives respond to final ACO rule

After much anticipation, the Department of Health and Human Services issued its final rule on Medicare accountable care organizations. Many of the initial proposed requirements have been relaxed quite a bit or waived altogether.

My initial reaction is that anyone who does not think that CMS is serious about moving from fee-for-service to prospective payment needs to read these revised requirements. The ACO final rule in many ways is much more user friendly and I believe it will encourage more hospitals to move forward with ACOs.

CMS will allow multiple payment models within the ACO program from the start, including an option that does not involve downside risk, and will allow first dollar savings once the minimum savings rate is achieved. I am pleased that CMS opted to waive its initial requirement that at least 50 percent of all primary care physicians in the ACO would be considered meaningful users of electronic health records to participate in the program. That was a good decision.

But not everything is perfect. As my fellow blogger Mike Stephens, former CEO of Hoag Memorial Hospital Presbyterian, points out, there are still some issues that may cause hospitals to shy away from the opportunity.

Stephens explains that all of the changes made to the final ACO regulations have significantly increased the likelihood hospitals and physicians will be able to move forward with patient-centered, integrated models of healthcare delivery.

However, the failure to alter the beneficiary opt-out provision will severely limit the ultimate success of the ACO initiative. The assumption of risk by providers must be based on the expectation patients will remain within the organized network. Without this assurance, the risk/reward balance is compromised and long-term, substantial reduction in the rate of increase in healthcare costs will not be realized.

We continue to believe there is room for improvement in the overall final rule, and look forward to seeing all healthcare leaders working with CMS to resolve outstanding issues.

Kester Freeman blogs regularly at Action for Better Healthcare.