CMS Releases Proposed Regulations Regarding Formation Of Accountable Care Organizations

The Centers for Medicare & Medicaid Services (CMS) recently proposed regulations regarding the formation of accountable care organizations (ACOs). Part of a broader value-based purchasing initiative being adopted by CMS, ACOs are the mechanism through which the organization will implement the Shared Savings Program established by the Patient Protection and Affordable Care Act. CMS is accepting comments on the proposed rule through June 6, 2011.

On March 31, 2011, the U.S. Centers for Medicare & Medicaid Services (CMS) released proposed regulations regarding the formation of accountable care organizations (ACOs). ACOs are the mechanism through which CMS will implement the Shared Savings Program (SSP) established by Section 3022 of the Patient Protection and Affordable Care Act. ACOs are part of a broader value-based purchasing initiative being adopted by CMS in response to provisions of the act intended to promote the three aims of better care for individuals, better health for populations and lower growth in health care expenditures. ACO providers and suppliers that participate in the SSP would be ineligible to participate in certain other Medicare demonstration programs. CMS is accepting comments on the proposed rule through June 6, 2011.

As set forth in the proposed rule, an ACO is a group of Medicare-enrolled providers and suppliers that work together to coordinate and deliver health care services to the Medicare fee-for-service enrollees assigned to it. Providers eligible to form an ACO include any combination of "ACO professionals" (physicians and mid-level providers) in group practices, networks of ACO professionals, partnerships and joint ventures between hospitals and ACO professionals, hospitals employing ACO professionals and critical access hospitals billing under Method II. Each ACO would be required to establish a legal entity with its own tax identification number that is duly qualified to transact business in each applicable state, which can receive and distribute any shared savings bonuses, repay shared losses for which the ACO may be responsible, collect and report data, and ensure provider compliance with program standards. An integrated provider (e.g., a hospital with employed physicians) could use its existing entity for this purpose as long as it meets CMS' criteria, however a new, separate legal entity would need to be established if that provider wishes to partner with any independent provider. CMS proposes to require...

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