Proposed ACO rules too risky, demo group participants say

Medicare's proposed rules for accountable care organizations hold too much financial risk, 10 physician groups that participated in an ACO demonstration project offering similarly structured incentive payments told the CMS in a joint letter.

The physician groups, including the Geisinger Clinic, Marshfield (Wis.) Clinic and Dartmouth-Hitchcock Clinic, wrote, that they "all have serious reservations about the economics and the complexity" of proposed Medicare accountable care. Without changes, none of the groups will participate, the groups wrote.

The letter is the second from physician groups to sharply criticize proposals (PDF) released in late March. Earlier this week, the American Medical Group Association called the rules "overly burdensome" and "too difficult to achieve."

Physicians and hospitals would be eligible for bonuses or penalties based on quality performance and cost-control under the proposed accountable-care rules. Those willing to take more risk for all three years of the initial contracts could see more-significant bonuses. Providers may adopt an alternative payment model that does not hold them at risk for penalties until the third year.

"As currently proposed, ACOs have a greater potential for incurring losses under either track than for generating savings," said the 10 physician groups. "This risk-reward imbalance makes it difficult, if not impossible, for internal decision-makers to accept the financial design."

Proposed rules require providers to take on financial risk; the groups called this problematic. Also concerning are bonus payout rules and required investment for proposed quality measures, according to the letter.

Medicare tested the incentive payments for five years with 10 physician groups under the Physician Group Practice Demonstration, which ended in March 2010. The Patient Protection and Affordable Care Act included a provision to create Medicare accountable care groups starting in 2012.