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Dr. Patrick Conway, CMS Innovation Center acting director

Give ACOs a break, AHA tells CMS Innovation Center

By Melanie Evans
Posted: April 18, 2014 - 2:15 pm ET

The American Hospital Association is lobbying the CMS Innovation Center to make it easier for accountable care organizations to earn Medicare bonuses and delay potential penalties as the agency looks to expand the initiative.

In a letter to Dr. Patrick Conway, the Innovation Center's acting director, the AHA said that financial risks outweighed the potential bonuses for hospitals under the Medicare shared-savings program, the accountable care initiative created under the Patient Protection and Affordable Care Act. “The No. 1 way to increase participation in ACO programs is to modify the shared-savings determination to ensure that more ACOs are able to receive a bonus—and a larger bonus—so that they can continue to invest in the program.”

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The Medicare shared-savings program as of January included roughly 320 ACOs, or networks of providers that contract to reduce health spending and meet quality targets in exchange for a share of savings that exceed certain benchmarks. A limited number of ACOs also volunteered to be at risk for losses if spending exceeds the benchmarks. In exchange, they qualify for larger bonuses if they succeed. After three years, all ACOs must enter the riskier contracts.

Medicare should delay the switch to riskier contracts for six years, the AHA said. “It takes several years to put in place the clinical and financial infrastructure necessary to transform care delivery,” according to the letter.

Meanwhile, benchmarks to earn shared savings are too high and quality metrics are too complicated, the AHA said.

Few ACOs of those with enough time to calculate savings have earned bonuses. Initial results show one-quarter of the 114 organizations in the program's first round will receive a share of savings.

Poor access to data from the CMS has also created significant challenges for ACOs, the association said. Their providers have been hampered by getting data on patients' care that is often inaccurate and six to nine months old, the AHA said. Monthly information on patients would better position ACOs to manage patients' care, the AHA said.

The Innovation Center's second ACO initiative, known as Pioneers, would benefit from greater flexibility as reimbursement under the contracts shifts toward capitation, the letter said.

Earlier this year, the Innovation Center asked for comments on attracting new Pioneers to participate. The initiative launched in January 2012 with 32 ACOs, but that fell to 23 after the first year as ACOs switched to the less-aggressive shared-savings program and a few dropped out.

The AHA suggests in its letter that Medicare's ACO programs won't remain viable without changes. “The ACO model is a good step forward toward transforming our delivery system, but its current structure is not sustainable given diminishing returns for providers.”

Follow Melanie Evans on Twitter: @MHmevans

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