New Programs Announced for Accountable Care Organization Initiative

Photo by Military Health via Flickr

Donald M. Berwick, head of the Centers for Medicare and Medicaid Services speaks at the Military Health System conference in January. Facing strong criticism of the proposed regulation for accountable care organizations (ACOs) the Obama administration announced new options Tuesday to lure hesitant doctors and hospitals.

ACOs are a new delivery model created under the health law that offers providers financial incentives to work together to provide high quality care to Medicare beneficiaries while keeping down costs. But hospital and doctor groups are complaining that the proposed regulation creates more financial risks than rewards and imposes onerous reporting requirements. On Monday the American Hospital Association estimated that starting an ACO could cost a hospital $11 million to $26 million in the first year. The proposed regulation put the cost at $1.8 million.

The Department of Health and Human Services announced Tuesday a new “Pioneer” ACO model, which officials promised “will provide a faster path for mature ACOs” and save Medicare as much as $430 million over three years. The idea is that existing integrated-care organizations such as Geisinger Health System, the Cleveland Clinic and Intermountain Healthcare will be able to launch ACOs as early as this summer. One incentive: the opportunity to pocket more of the expected savings in exchange for taking on greater financial risk. These ACOs also will be able to work with private insurers and eventually Medicaid, the state-federal program for the poor.

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