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Hospital Report

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The premier resource for hospital professionals from Relias Media, the trusted source for healthcare information and continuing education.

CMS sweetens the pot – but are providers really ready to go all-in on ACOs?

January 12th, 2015

After more than six months and 1,300 comments, the Centers for Medicare & Medicaid Services has released final rules for accountable care organizations. You can read all 696 pages here.

There’s no question that CMS addressed some of the aspects of the proposed rule that healthcare providers found most bothersome, and both the American Medical Association and American Hospital Association have issued statements that I read as guardedly favorable. Even so, it seems unlikely the new rule will lead to a rush of providers setting up ACOs. Kathleen Sebelius as much as acknowledged this in CMS’s own press release: “This model of delivering care may not be right for everyone,” she said, “but it provides new incentives for doctors, hospitals, and other health care providers to work together in new ways.”

Among other provisions, the new rule cuts the number of measures used to assess quality from 65 to 33, cut financial risk for some providers, and drops electronic health record use as a condition of participation. (Here’s CMS’s blessedly brief run-down of the differences between the proposed and final rules: http://www.cms.gov/aco/downloads/Appendix-ACO-Table.pdf.)

Even with these tweaks, though, it’s hard to imagine that beleaguered providers already trying to cope with a weak economy and a deluge of new regulations will be willing to shell out millions of dollars in start-up costs to get into the ACO business. (CMS itself estimated start-up costs to average $1.8 million. A study released by the AHA in May put the cost of launching an ACO and managing it for the first year at between $11.6 million and $26.1 million.)

No doubt a few brave souls will take the plunge. Expect everyone else to be watching those organizations like a hawk to see if ACOs really are a viable option.