On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) proposed guidelines for doctors, hospitals, and other healthcare providers who want to establish Accountable Care Organizations (ACOs). Healthcare experts hope that ACOs will put an end to fragmented care methods by creating a “shared savings program” that provides an incentive for caregivers across all care settings to work together to provide high-quality, coordinated care for Medicare beneficiaries.

Although the ACO program doesn’t go into effect until Jan. 1, 2012, CMS is soliciting feedback on the proposed guidelines from providers, suppliers, Medicare beneficiaries, and other interested members.

What is an ACO?
Theoretically, ACOs will facilitate better care and bring down costs by establishing financial incentives for providers and suppliers (such as physicians, hospitals, or long-term care facilities) to monitor patients from start to finish. ACOs that make sure that patients receive appropriate care at the appropriate time and limit waste and abuse of procedures and tests will be eligible for additional Medicare payments.

According to CMS, cost savings are not the sole goal of the program, although ACOs that fail to consolidate a patient’s care effectively could be held financially responsible for the unnecessary costs to the healthcare system.

In addition, ACOs would have to meet high quality standards, measured by patient experience, care coordination, patient safety, preventive health care, and at-risk population/frail elderly health care to ensure that patients are “happy with the care they receive and have better health outcomes.”

The quality standards proposed by CMS are largely based on nationally recognized quality measures in other CMS initiatives such as electronic health records and the Physician Quality Reporting System.

Under the proposed guidelines, providers who wish to participate in the shared savings program would be required to complete an application form, explaining how they plan to deliver high-quality, cost-effective care via an ACO. If the application is approved, the ACO must sign a 3-year participation agreement with CMS. However, CMS can terminate the agreement if the ACO fails to meet its objectives.

Who can participate?
Under the Patient Protection and Affordable Care Act, an ACO may include the following providers and suppliers of Medicare-covered services:

• ACO professionals such as physicians and hospitals that meet the statutory definition in group practice arrangements
• Networks of individual practices of ACO professionals
• Partnerships or joint venture arrangements between hospitals and ACO professionals
• Hospitals employing ACO professionals
• Other Medicare providers and suppliers as determined by the Secretary of the Department of Health and Human Services

Next steps
As this issue of AAOS Now went to press, the American Association of Orthopaedic Surgeons (AAOS) was preparing responses to both the proposed guidelines issued by CMS and to the proposed statement on antitrust enforcement policy regarding ACOs issued by the Federal Trade Commission and the Department of Justice Antitrust Division.

With regard to the CMS guidelines, the AAOS plans to comment on the following issues:

• governance and legal structure mechanisms outlined for ACOs
• assignment of Medicare beneficiaries to specific ACOs
• quality and measure reporting requirements
• payment models
• participation by specialists

The AAOS Health Care Systems Committee has prepared a primer on ACOs that provides background information and perspectives on their implementation—both pro and con—from physicians, hospitals, and attorneys. This resource is designed to introduce orthopaedic surgeons to the topic and provide a jumping off point for further investigation and involvement. It can be downloaded from the practice management center on the AAOS Web site, www.aaos.org/pracman

Madeleine Lovette is the communications specialist in the AAOS office of government relations. She can be reached at lovette@aaos.org