What is an ACO?

Accountable Care Organizations are mandated in the Affordable Care Act or federal health reform law, passed in March 2010. An ACO, by design, intends to lower costs and improve care by coordinating care and communication between physicians, hospitals and other health care providers. The reform law requires federal health programs to begin contracting with ACOs starting in January 2012 (Reichard, CQ HealthBeat, 3/28).

Notice of proposed rule for the Medicare Shared Savings Plan (MSSP) were released by CMS on March 31, 2011. The government will allow two months for public comment before issuing the final rules.

The Department of Health and Human Service (HHS) estimates that ACOs will save Medicare between $510 million and $960 million during the first three years (Goldstein, Washington Post, 3/31). Officials expect 75 to 150 ACOs to launch, caring for 1.5 million to four million of Medicare's 47 million beneficiaries (New York Times, 3/31).

Proposed Regulations

According to the rules, groups of care providers can qualify as ACOs when they provide primary care for at least 5,000 patients. To achieve savings, they also must meet 65 quality standards, which encompass five categories:

•     Patient experience;
•     Care coordination;
•     Patient safety;
•     Preventive health; and
•     Treating sick and frail Medicare beneficiaries

Under the rules, some ACOs will receive federal bonus payments if they meet certain benchmarks (Washington Post, 3/31). The shared savings program offers financial rewards for ACOs that save money through efficient care coordination (Lowes, Medscape, 3/31). The rules also include financial penalties if organizations exceed their spending targets (Reichard/Norman, CQ HealthBeat, 3/31).

Implications for Health IT

In a New England Journal of Medicine perspective, CMS Administrator Donald Berwick wrote that health IT will be a "core competency" of ACOs.
In the rule, CMS notes that at least half of primary care physicians in an ACO must have achieved meaningful use of electronic health records by the beginning of the second year of the shared savings program.

According to the rule, data collection efforts within ACOs "should minimize the burden on providers." The rule adds, "As part of that effort, we will continuously seek to align our measures with the adoption of meaningful use standards" (Modern Healthcare, 4/1).

The rule also states that ACOs "will draw upon the best, most advanced models of care, using modern technologies, including telehealth and electronic health records, and other tools to continually reinvent care in the modern age" (Goedert, Health Data Management, 3/31).