CMS announces over 100 new ACO contracts

Medicare nearly doubled the size of one accountable care program as of Jan. 1 with 106 new ACO contracts (PDF) that offer hospitals and doctors financial incentives to improve quality and slow health spending.

The CMS announced its latest and largest round of accountable care organizations under the Medicare shared-savings program, which launched in April last year with 27 ACOs. Another 89 ACOs were named to the program last July. The Center for Medicare and Medicaid Innovation separately launched 32 Medicare ACOs known as Pioneers roughly one year ago. CMS said half of ACOs are physician-led and care for less than 10,000 Medicare enrollees.

Jonathan Blum, the CMS acting principal deputy administrator and director for the center for Medicare, said it is too soon to release results from Medicare accountable care efforts launched last year. Blum, speaking with reporters after the CMS announced the latest ACOs, said the agency was optimistic the contracts would reduce costs.

Accountable care, an experimental payment model that has also emerged among commercial insurers, was among a few policies in the health reform law that seek to more closely tie payment to performance, though critics contend that incentives in such programs are too modest.

Hospitals and doctors in Medicare's shared-savings program may select from two incentive options, including one with greater incentives but also carries the risk of potential losses. So far, eight shared savings ACO have selected his option. The other shared-savings option offers only bonuses but no risk of losses. Pioneer accountable care contracts require all hospitals and doctors to be at risk for losses starting this year.

Medicare spending increased 6.2% in 2011, a growth rate faster than the 4.3% growth in 2010, CMS officials said this week. The program's budget is one likely target for lawmakers who are seeking a deficit reduction deal as they debate scheduled spending cuts and raising the debt ceiling in coming weeks.

The group of ACOs announced today includes 15 Advance Payment Model ACOs, physician-based or rural providers who receive upfront and monthly payments for capital investments, the CMS said.

Pharmacy chain Walgreens contracted with two medical groups and one health system to form three separate Medicare ACO. The drugstore giant, which also operates walk-in clinics, isn't the only company to see a market opportunity in Medicare's accountable care program. Universal American, a publicly traded Medicare Advantage and supplemental insurance provider, also contracted with hospital and medical groups to successfully win Medicare ACO contracts last year.

Dr. Jeffrey Kang, Walgreens' senior vice president of health and wellness services and solutions, said the company brings to the ACOs prevention, screening, health and wellness programs; medication management; walk-in clinics; and care management with physician groups.

Stephen Shortell, a professor of health policy and management for the University of California Berkeley School of Public Health, said the importance of medication management among costly, chronically ill patients makes the entry of a pharmacy chain into accountable care unsurprising.