New ACO Rule To Delay Penalties

December 26, 2014

A new rule proposed in December by the Center for Medicare and Medicaid Services (CMS) would, among other things, delay penalties for poor performance by participants in Accountable Care Organizations (ACOs) for up to three years. This would create greater incentive for participation in ACOs, as it would give new adopters time to iron out errors and inefficiencies.

The CMS defines ACOs as doctors, hospitals, and other health care providers who come together voluntarily to give coordinated high-quality care to their Medicare patients while managing costs. The reward for ACO providers that save money while also meeting quality targets is that they get to keep a portion of the savings to the Medicare program.

According to the 19th Annual Towers Watson/National Business Group on Health (NBGH) Employer Survey on Purchasing Value in Health Care, 28% of employers surveyed said it was likely that employer-sponsored health care will be delivered through highly coordinated provider models such as ACOs over the next five years.

Said CMS Administrator Marilyn Tavenner, “This proposed rule is part of our continued commitment to rewarding value and care coordination – rather than volume and care duplication. We look forward to partnering with providers and stakeholders to continuously refine and improve the Medicare Shared Savings program.”

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