The Centers for Medicare and Medicaid Services issued a proposed rule March 31 that establishes the Medicare Shared Savings Program authorized in the Patient Protection and Affordable Care Act.

Under Shared Savings, provider organizations are encouraged to form accountable care organizations to tightly coordinate the care of chronically ill patients across the continuum of care, and to share in the savings that may result.

The Department of Health and Human Services' Office of the Inspector General has issued an accompanying notice describing and seeking public input on waivers of certain federal fraud and abuse laws for organizations participating in the Medicare Shared Savings Program.

The proposed rule and notice are available now at the Federal Register Public Inspection Desk, and will be officially published in the Federal Register on April 7.

During a conference call announcing the proposed accountable care organization rule, CMS officials tried to allay concerns of commercial payers that ACOs would have too much pricing power in their local markets, says Chas Roades, chief research officer, health care, at the Washington-based Advisory Board Company, a consulting and technology services firm.

"CMS is very sensitive to the competitive marketplace implications of all this, they obviously got a lot of feedback and a lot of concern from commercial payers that ACOs will have too much market and pricing power in contract negotiations. It was apparent that HHS Secretary Sebelius have been working very closely with the Justice Department and the FTC to avoid that type of outcome," Roades says.

"If you're a payer, one thing you're worried about with an ACO is that it's sort of a pseudo-insurance organization, it bears insurance risks for the health of a population and there are a lot of incentives to create some scale around an ACO to make it succeed. That has been worrisome to commercial payers," he adds.

Roades also says the tone of the comments by federal officials also indicates regulators from the Justice Department and FTC are going to be very willing to creatively approach ACOs to allow integrated organizations to emerge. "That's a pretty striking change in the tone of how the Justice Department typically views the emergence of more integrated provider organizations."

One surprise in the proposed rule was that the government created two tracks, one that is a "slow on-ramp" where there's only upside potential in the first couple years and then downside risk, and a second track "that is straight at the downside risk."

"So, ACOs will be exposed to costs and population risk in addition to being able to earn bonuses. That's a more aggressive stance that many expected," Roades says. "It really puts financial teeth behind becoming an ACO."

Roades also was struck by how much the proposed rule emphasizes quality safeguards. The rule contains 65 new quality metrics scattered across five categories, many of which go exactly to the issue of chronic diseases.  There are very granular metrics in the rule that will determine how much savings can be shared for treatment of specific chronic diseases. "They're very zeroed in on quality metrics," he adds.

Health Data Management at 1:00 p.m. Eastern Time on April 5 will host a Web seminar with health law attorneys Bruce Fried and Robert Slavkin examining provisions of the Shared Savings Program proposed rule. Click here for more information.

Gillespie is the editor-in-chief of Health Data Management, a SourceMedia publication. Goedert is the magazine’s news editor.

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