Government News
CMS Issues Rule Describing Standards ACOs Must Meet
Psychiatric News
Volume 46 Number 9 page 4-26

The federal Centers for Medicare and Medicaid Services (CMS) has issued a proposed rule governing the nature and function of "accountable care organizations (ACOs)," including performance measures that the organizations would be required to meet.

ACOs are a model for coordinated delivery of medical care within a reformed health care system and were designated for a demonstration project in the Patient Protection and Affordable Care Act signed by President Obama last year. The project is known as the Medicare Shared Savings Program.

Generally, ACOs are coalitions of physicians and hospitals responsible for coordinating medical care for populations of patients across the continuum of care; they agree to be accountable for improving the health and experience of care for individuals, as well as the health of populations, while reducing the growth rate in health care spending.

Under the Shared Savings Program, participating ACOs that meet performance measures would share in those savings, while those that fall short could be liable for financial penalties. According to the proposed rule issued by CMS, a physician participating in an ACO would be required to notify a beneficiary that he or she is participating in an ACO and that the physician will be eligible for additional Medicare payments for improving the quality of care the beneficiary receives while reducing overall costs or may be financially responsible to Medicare for failing to provide efficient, cost-effective care. The beneficiary may then choose to receive services from the provider or seek care from another provider that is not part of the ACO.

The CMS Web site has a page devoted to the Shared Savings Program, <www.cms.gov/sharedsavingsprogram>.

In the proposed rule, CMS outlined 65 performance measures for establishing the standard ACOs must meet under the Shared Savings Program. The 65 measures span five quality domains: patient experience of care, care coordination, patient safety, preventive health, and at-risk population/frail elderly health. Included in the preventive-health domain is a measure for depression screening.

The health reform law specifies that an ACO may include the following types of groups of providers and suppliers of Medicare-covered services:

  • ACO professionals (that is, physicians and hospitals meeting the statutory definition) in group-practice arrangements.

  • Networks of individual practices of ACO professionals.

  • Partnerships or joint-venture arrangements between hospitals and ACO professionals, or hospitals employing ACO professionals.

  • Other Medicare providers and suppliers as determined by the secretary of Health and Human Services.

The lengthy proposed rule, published in the Federal Register on April 7, spells out numerous regulations governing the makeup and operation of ACOs. For instance, to participate in the Shared Savings Program, an ACO would have to complete an application providing information on how the ACO plans to deliver high-quality care at lower costs for the beneficiaries it serves. The ACO must agree to accept responsibility for at least 5,000 beneficiaries. If the application is approved, the ACO must sign an agreement with CMS to participate in the Shared Savings Program for three years. An ACO will not be automatically accepted into the Shared Savings Program.

ACOs that meet the program's quality-performance standards would be eligible to receive a share of the savings they generate below a specific expenditure benchmark set by CMS for each ACO. But ACOs could also be required to repay Medicare for a portion of their expenditures that exceed the benchmark.


The AMA has generally endorsed the concept of ACOs but has expressed concern about the financial obstacles to joining or forming an ACO, particularly for doctors in private practice or small groups. The AMA has also expressed antitrust concerns; under existing laws governing the referral of patients to hospitals or other entities in which a physician has a financial interest, physicians cannot legally form an ACO.

At its Interim Meeting last November, the AMA House of Delegates approved a set of principles to guide the formation and function of ACOs that would have to be met to receive AMA support (see Principles for Accountable Care Organizations).

"We need to have some form of antitrust relief," psychiatrist John McIntyre, M.D., a member of the AMA Council on Medical Services and an APA delegate to the AMA House of Delegates, told Psychiatric News after the November meeting. "Otherwise, physicians who try to bond together to form an ACO or clinical integration system will run afoul of existing laws. The Affordable Care Act addresses this subject in terms of so-called —€˜safe harbors—€™ to protect physicians, and the principles approved by the house express the AMA's support for that kind of protection" (Psychiatric News, December 17, 2010).

In addition to the proposed rule on ACOs, CMS has issued—in conjunction with the Office of Inspector General (OIG), the Federal Trade Commission, the Antitrust Division of the Department of Justice, and the Internal Revenue Service—three documents related to the issue of antitrust:

  • A joint CMS and OIG statement on waivers for ACOs participating in the Shared Savings Program with regard to the antitrust statutes.

  • An IRS notice requesting comments regarding the need for guidance on participation by tax-exempt organizations in the Shared Savings Program through ACOs.

  • A joint Federal Trade Commission and Department of Justice Proposed Statement of Antitrust Enforcement Policy Regarding Accountable Care Organizations Participating in the Medicare Shared Savings Program.

Because of the complexity and volume of the federal government's proposed rules and notices, physician organizations—including APA—were at press time still reviewing the documents. The rule comment period ends June 6, and the AMA said it intends to release its comments early so they can be used by state medical and specialty societies.

In a statement released after the publication of the proposed rule, psychiatrist Jeremy Lazarus, M.D., who is speaker of the AMA House of Delegates, said the AMA is reviewing the rule.

"ACOs offer great promise for improving care coordination and quality while reducing cost, but only if all physicians who wish to are able to lead and participate in them," Lazarus said. "For this to happen, significant barriers must be addressed, including the large capital requirements to fund an ACO and to make required changes to an individual physician's practice, existing antitrust rules, and conflicting federal policies.

"The AMA made recommendations to CMS on how to make it possible for physicians in all practice sizes and settings to successfully lead and participate in ACOs, including flexible requirements for ACO structure, transitional steps for ACO formation, increased access to loans and grants for small practices, easing of antitrust restrictions, and timely access to quality data. The AMA looks forward to working with the administration to develop physician-led new models of patient care."

The proposed rule is posted at <www.gpo.gov/fdsys/pkg/FR-2011-04-07/html/2011-7880.htm>. The joint CMS-OIG notice is posted at <www.ofr.gov/inspection.aspx?AspxAutoDetectCookieSupport=1#special>. The proposed antitrust policy statement is posted at <www.justice.gov/atr/public/guidelines/269155.pdf>. IRS Notice 2011-20 will be posted at <www.irs.gov/pub/irs-drop/n-11-20.pdf>.4_1.inline-graphic-1.gif

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