Cheryl et al Report on CMS’ ACO Regulations

Paul Levy

First published 5/11/11 on [Not] Running a Hospital

Cheryl Clark and her colleagues at HealthLeaders Media have put together a special report on the industry’s response to CMS’ proposed Accountable Care Organization regulations. This a helpful survey that supplements unsupported comments from people like me. Let’s start with a reminder of the general scope of the regulations:

Groups of ACO professionals with a minimum of 5,000 beneficiaries would be permitted to apply for one of two risk models in order to benefit from shared savings over the three-year program. In the first model, providers would share savings of 50% in all three years, but would be at risk in year three for any losses that exceed 2% of the benchmark established by the Centers for Medicare & Medicaid Services.

In the second model, ACOs could receive a higher percentage of shared savings, up to 60%, but would be at risk of absorbing losses in each of the three years if their expenditures exceeded the CMS benchmark.

Beneficiaries would be retrospectively assigned to the ACO, to reduce the possibility that providers would avoid patients with multiple diagnoses.

There are a variety of comments from among the most progressive health care leaders in the country, but here is one that to me, says it all:

Jay Cohen, MD, executive chairman of Monarch Healthcare in Orange County, CA, says . . . the negatives on the flip side . . . outweigh the positives in the proposed regulations, and may prevent his organization from opting to be an ACO. “The way the proposed regulations are written will not work,” he says.

Notes Cheryl in conclusion: “Industry leaders expect the regulations will be modified once CMS hears the volume of concerns during the comment period.”

Paul Levy is the former CEO of a large Boston hospital system. He writes at [Not] Running a Hospital.

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