New Rules for ACOs

CMS gives ACOs three more years in delaying of penalties

Accountable Care Organizations (ACOs) may have an additional three years before penalties would be enforced for poor performance, according to a new proposal by the Federal government. These groups of doctors, hospitals, and providers that care for Medicare patients work jointly as ACOs toward the goal of retaining whatever additional financial resources are left over after completed care. Currently, there are about 330 ACOs in the United States, and together they have saved Medicare more than $700 million in healthcare spending.

 Six Years Penalty-Free

With the proposed additional three years, this means most ACOs will have had a total of six penalty-free years to practice. But it’s not without a trade-off, however. Should these ACOs be granted the six year period, they would only be allowed to keep less than 40 percent of the Medicare cost savings, opposed to the 50 percent in years past. Thus far, only about a quarter of ACOs have been able to achieve bonuses through the Medicare Shared Savings Program, so results of this method are still uncertain.

So why the increase in time frame?

Many ACOs are concerned that three years is not enough to prepare for the financial repercussions of the penalties. These types of medical organizations are still finding their footing and need to have strong infrastructures in place before they are stable enough to take on such financial risk.

 Pioneer ACOs

CMS also proposed a new higher risk type of ACOs called the Pioneer ACO Model, which would allow these types providers to keep up to 75 percent of the Medicare savings–but if the costs exceeded the allotted spending amount, they would be responsible for 15 percent of the cost, whereas others are only liable for up to 10 percent. The idea behind these higher risk ACOs is simple: higher risk for higher reward. The end goal for all Accountable Care Organizations is to make healthcare more efficient, effective, and affordable.

 Public Opinion Sought

The general public has until February 6th, 2015 to comment on these proposed changes and to give their feedback on how ACOs should be shaped moving forward. One of the major concerns for these types of providers is any abuse of the Medicare Shared Savings program. However, with the noted progress thus far, it seems that the goal of attaining bonus level from Medicare savings has been slow to pick up. As healthcare costs are always unpredictable and are based on situational care, it is difficult to project financial goals for the future.

We want your feedback on this issue. Do you think an additional three years of penalty-free time for ACOs is helpful?