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Berwick
Berwick

Final ACO regs include bigger bonuses


By Melanie Evans
Posted: October 20, 2011 - 11:15 am ET
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(Story updated at 2:30 p.m. ET.)

Medicare accountable care organizations could see larger bonuses and face fewer quality measures under rules issued by the CMS.

In final rules for Medicare accountable care organizations (PDF), published today, the CMS said it would no longer require all ACOs to face potential penalties, and it increased possible bonuses. The final rule also proposed half the number of quality measures included in draft rules released last March. Under accountable care, healthcare providers that reach quality and cost-saving targets are eligible to share in the savings.

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Federal officials, speaking to reporters after the rules were released, stressed the changes were a response to the crush of comments on draft rules. CMS Administrator Dr. Donald Berwick described the volume of replies as a “mountain” of comments.

Hospitals and physician groups largely rejected draft proposals as too risky and too demanding. High-profile physician groups that tested an early model of accountable care declared the draft rules unworkable in a letter that said none would participate without significant changes.

The CMS also proposed an advanced-payment program for small physician-owned and rural hospitals that lack capital to start an accountable care group. Under the program, up to 50 small ACOs will quality for upfront payments that will be paid back as providers reduce Medicare costs. The Center for Medicare and Medicaid Innovation will award up to $170 million under the program.

Agreements for Medicare ACOs and the advanced payment program will begin next year on two dates: April 1 and July 1.

Under the Medicare accountable care final rules, the CMS would monitor quality performance using 33 measures instead of the 65 measures proposed in March.

As proposed in March, ACOs may choose one of two incentive options under the final rule. However, providers no longer face possible penalties under both options. Previously, providers that failed to achieve quality and savings targets could be at risk for penalties either for one year or three years, depending on the option. The CMS eliminated the possible one-year penalty under the final rules.

The CMS also increased the amount of bonuses that providers may earn. Now, once providers clear a savings target, the CMS agreed to share savings earned from the outset. Previously, providers were eligible to share savings after the first 2% in cost-reductions.

The CMS also relaxed one major capital-intensive requirement. Primary-care providers in accountable care organizations no longer face a requirement that at least half must have earned “meaningful use” designation by the second year.

The CMS also removed from the final rule some quality measures tied to electronic health records. One measure of EHR use remained, but somewhat altered: percentage of primary-care physicians who qualify for electronic health record incentive programs. The CMS said the measure will be weighted higher than quality measures.

Patients will no longer be assigned to accountable care organizations retrospectively, the CMS said. Medicare enrollees will be assigned to ACOs prospectively, every three months, but the CMS will review assignments at the end of each year.


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