New rules proposed for ACOs

April 8, 2011

Another provision in the Affordable Care Act that may help to rein in medical costs is the Shared Savings Program. The Affordable Care Act requires that the Shared Saving Program be established by January 1, 2012. Under this program, Accountable Care Organizations (ACO) will be administered by the Centers for Medicare and Medicaid Services (CMS) to manage and coordinate care for Medicare fee-for-service beneficiaries. ACOs that meet quality-of-care and cost-reduction performance standards will be eligible to receive a share of the savings (hence the name of the program).

An ACO is a group of providers and suppliers of health care services (hospitals, physicians, etc.) that work together with the goal of delivering high-quality health care while reducing costs. The theory behind this program is that well-run ACOs will improve communication and coordination among physicians and other providers, which will lead to both cost reductions and better care for patients. Most Medicare beneficiaries have multiple chronic conditions and receive care from multiple physicians, hospitals or other health care providers. Poor coordination among these providers can lead to lack of care, unavailable or lost medical records, duplication of care and redundant test procedures, readmissions to hospitals and even medical mistakes, all of which can and do increase the cost of care for Medicare beneficiaries.

On March 31, HHS proposed rules designed to help doctors, hospitals and other health care providers improve the coordination of care for Medicare beneficiaries through Accountable Care Organizations. Among these rules:

  • To become an ACO the group must submit an application to the CMS that includes a plan for delivering high-quality care and reducing costs. The group must have at least 5,000 beneficiaries, and agree to participate in the Shared Savings Program for three years. A governing body that represents the ACO must be established, and each ACO must routinely assess, monitor and report on the care it delivers.
  • ACOs must meet quality performance standards established by the new rules, as well as the savings benchmark set for them by the CMS to receive shared savings. If they fail to meet these standards they will be held liable for a portion of the losses.
  • ACOs will be required to notify beneficiaries that they are participating in an ACO, and that their providers will be eligible for payments for improved care and lower costs. They must also inform beneficiaries that claims data may be shared with the ACO to make it easier to coordinate their care. Beneficiaries have the right to opt out of the data sharing arrangements.

The rules are subject to a 60 day public comment period, and CMS encourages the public, providers, suppliers and Medicare beneficiaries to submit their comments for consideration. HHS will be holding open-door forums and listening sessions to help the public understand what the CMS is proposing and how to comment (dates and times have not been posted yet, but you can check these web sites for updates: and We encourage readers, especially Medicare-eligible individuals, to become informed about the new rules and submit comments during the comment period.

One Response to “New rules proposed for ACOs”

  1. […] offering coordinated patient-centered care, and for operating in an ACO-like manner.  An ACO is a group of health care providers and suppliers that work together to deliver high-quality care […]

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