On March 30, 2011, CMS released its Proposed Rule to implement the Accountable Care Organization (“ACO”) provisions of the Patient Protection and Affordable Care Act. According to CMS, the ACO model is intended to assist doctors, hospitals, and other health care providers better coordinate care for Medicare beneficiaries. ACOs would be eligible to receive a portion of any savings if they meet certain criteria.
As background, an ACO is defined as a legal entity of eligible providers and suppliers working together to coordinate care for Medicare beneficiaries. Under the Proposed Rule, the ACO will be jointly governed by its members. Providers and suppliers participating in an ACO would continue to be reimbursed by Medicare under existing law, but would also be eligible to receive a portion of money that it saves Medicare through better care and better health. In general, to be eligible for shared savings, ACOs must reduce spending below a minimum savings rate target set by CMS, and meet or exceed quality performance standards.
Due to the scope of the Proposed Rule and its potential implication on other federal laws and policies, CMS coordinated with the HHS Office of Inspector General (“OIG”), the Federal Trade Commission, the IRS, and the Department of Justice when issuing this Proposed Rule. The results of this coordination were three more proposed rules and notices – one regarding antitrust implications, one discussing potential waivers of federal fraud and abuse regulations, and the third a request for comment from the IRS on implications of participation in ACOs of tax exempt organizations such as nonprofit hospitals.