September 22, 2023

Epic Law

The Law Folks

Medical Billing – Proposed Rulemaking on Accountable Care Organizations

One of the initiatives of the Affordable Health Care Act is Accountable Care Organizations (ACOs). These networks serve people on Medicare and include policies and procedures to assist physicians, hospital personnel and other caregivers to better coordinate care for Medicare patients.

The idea is for health care providers to oversee individual patient are across doctor’s offices, hospitals, long term care and other care settings. By doing so, the ACO participants will become eligible for incentives via the Medicare Shared Savings Program. Participation is voluntary.

Reason for ACOs

More than half of Medicare beneficiaries have five or more chronic conditions. These can include diabetes, hypertension, arthritis, etc. Since these are often treated by multiple doctors, the care may not be coordinated which can lead to patients not receiving needed care, receiving duplicate care or bearing an increased risk of suffering from medical mistakes. In fact, on average, one in seven Medicare patients who have been admitted to a hospital, has been subject to medical errors. Studies about using ACOs have suggested that up to $960 million in Medicare dollars could be saved over three years.

ACO Groups

The Affordable Care Act says that an ACO can include:

– Physicians and hospitals meeting the statutory definition in group practice arrangements

– Individual practice networks of ACOs

– Hospitals that employ ACO professionals

– Partnerships or joint ventures between hospitals and ACOs

– Other Medicare providers as determined by the Secretary

Shared Savings

Medicare would continue to pay the health care providers and suppliers as it currently does. In addition, however, CMS would also develop a benchmark for each ACO to determine if it would receive shared savings or be held accountable for losses.

The risk based models that could be selected from are:

– Sharing of saving only in the first two years and a sharing of savings and losses in the third year

– Sharing of savings and losses for all three years

This will allow less experienced ACOs to obtain experience before moving to a risk based model. It will also let more experienced ACOs vie for a greater share of savings but also risk repaying the Medicare a portion of any losses.

The five key areas that will be measured are:

– Patient/caregiver care experience

– Care coordination

– Patient safety

– Preventive health

– At-risk population/frail elderly health care

To read the Notice of Proposed Rule-making for ACOs, visit