Accountable Care Organizations Overview Part I

February 22, 2011, 10:46 AM

Accountable Care Organizations (ACOs) will play an instrumental role in reforming the health care delivery system under The Patient Protection and Affordable Care Act (the PPACA). ACOs are designed to facilitate coordination and cooperation among healthcare providers to improve quality of care for Medicare beneficiaries and reduce unnecessary costs. Although the Centers for Medicare & Medicaid Services (CMS) is expected to issue the final rules on ACOs in the near future, this post and the next several will help lay the foundation for a more in-depth discussion upon issuance of the final rules.

What is an ACO?

An ACO is an organization of healthcare providers that agrees to be accountable for the quality, cost, and care of Medicare beneficiaries enrolled in the customary fee-for-service program assigned to it. In this regard, assigned means beneficiaries for whom professionals in the ACO provide the bulk of primary care services.

Who may become an ACO?

The final rules are still to be issued; however, the PPACA itself specifies that the following may become an ACO:

  1. Physicians and professionals in group practices;
  2. Physicians and professionals in networks of practices;
  3. Partnerships or joint venture arrangements between hospitals and physician/professionals;
  4. Hospitals employing physicians/professionals; and
  5. Any other entities that the Secretary of Health and Human Services (HHS) may deem appropriate.
What types of requirements will an ACO have to meet?

Under the PPACA, there are a number of requirements an organization will have to meet in order to participate as an ACO. Even though the final rules may augment these requirements, the PPACA delineates that the organization must:

  1. Have a formal legal structure to receive and distribute shared savings;
  2. Have a sufficient number of primary care professionals for the number of assigned beneficiaries (5,000 beneficiaries at a minimum);
  3. Agree to participate in the program for a minimum period of three (3) years;
  4. Have sufficient information regarding participating ACO healthcare professionals as the Secretary of HHS determines necessary to support beneficiary assignment and determination of payments for shared savings;
  5. Have a leadership and management structure that includes clinical and administrative systems;
  6. Have defined processes to promote evidenced-based medicine, report the necessary data to evaluate quality and cost measures, and coordinate care; and
  7. Demonstrate it meets patient-centeredness criteria, to be determined by the Secretary of HHS.
--Christopher L. McLean