Accountable Care Organizations: The Private Sector Will Lead

The Patient Protection and Affordable Care Act ("PPACA") became law on March 23, 2010. Since then, one of the provisions generating the most discussion and interest among health care providers is the Shared Saving Program ("SSP"). Fundamental to the SSP is development of so-called accountable care organizations ("ACOs"). These organizations would include independent health care providers and institutions involved in different aspects of an episode of care. ACOs are conceived of as systems of care that emulate the care delivery approaches of the participants in the Physician Group Practice Demonstration Project, including Geisinger Clinic, Marshfield Clinic and Park Nicollet Clinic, and other leading organizations, such as Mayo Clinic and Group Health Cooperative.

The term "Accountable Care Organization" is now used to refer to any arrangement, not just SSP organizations, where independent providers, working together, focus on bringing efficiency and quality to the delivery of health care services by decreasing mistakes and taking responsibility for the entire episode of care. A notable success in California is the collaboration involving Catholic Healthcare West, Blue Shield of California and Hill Physicians Medical Group for enrollees in the Sacramento area who receive health care benefits through the CalPERS. Estimated savings were $15,000,000 over two years. The proposed SSP regulation was published on April 7, 2010. Proposed at the same time were rules and announcements setting the processes and procedures by which ACOs could receive some assurance that their new relationships would not violate antitrust laws, would not have a negative effect upon the tax-exempt status of nonprofit participants, and would not violate the federal anti-kickback and Stark statutes.

After wading through and assessing the proposed SSP regulation, the verdict was clear and was reflected in many of the over 1,200 comments received by the Centers for Medicare & Medicaid Services ("CMS"). Grave concerns were expressed about the complexity of the proposal, the difficulties inherent in the new processes to achieve compliance with other laws, the costs to develop systems that would permit successful participation in the SSP, and the amount of return to be received. Perhaps the most important issues were the freedom given to assigned beneficiaries to receive services from providers who were not members of the ACO and the retroactive assignment of beneficiaries to an...