CMS Releases Draft ACO Regs

The regs are only 429 pages long. Here are my initial observations:

• The ACO is one of several programs in PPACA that advance clinically integration and physician-hospital alignment. The common thread running through episode-based payments, value-based purchasing, the medical home, avoidable readmissions, and ACOs is clinical integration in an organized delivery system that is capable of taking risk for results—cost savings, outcomes, and service delivery.
• The ACO is not for everyone. Guardedly, CMS suggested it envisioned only five million Medicare enrollees would participate in the ACOs—that’s 11 percent of total enrollment. (On page 352, however, the guidance suggested a lower range of 1.5-4.0 million). Some provider communities will no doubt pass, preferring to create clinically integrated delivery systems through other means. And for those pursuing the one-sided lower risk pathway, in year three, financial risk for savings and quality is required, so the reality of risk in the ACO model, and in many of the PPACA-related delivery system alignment efforts, is explicit. In most communities, the question for leaders are these: (1) should we create a clinically integrated delivery model wherein physicians, hospitals, long term care, and allied health professionals become formally structured to assume risk for costs and outcomes? (2) in assuming risk, are we prepared to make investments for infrastructure and changes to how we operate to achieve optimal results? and (3) do we have the core competencies necessary to manage population-based outcomes and costs, and the risk associated, or should we outsource these capabilities to a strategic partner?
• If an ACO is the pathway chosen work must begin now. “Clinical integration” requires deployment of health information technologies, clinical operating models, data capture and performance reporting and alignment of financial incentives for physicians, hospitals and allied professionals who share risk for results. It requires strong local leadership and substantial investment in hard and soft costs. It may require expertise in risk management accessible through a partnership with a health plan, or third party. It starts January 1, 2012, so decisions must be made now to participate or pass.

More to come.