Memphis healthcare attorney Charles Key sent out the following memo about the act:
At long last, a health care/health insurance reform bill has been passed by Congress. All that remains to be done before the President's signature is a final review by the Senate, expected to be completed within the next 48 hours. It's a big bill (2,409 pages), and of course detailed analyses will be rolling out in the days, weeks, and months to come. But for health care providers, perhaps the most urgent news has to do with incentives in the legislation for development of "Accountable Care Organizations."
The term "Accountable Care Organization" (ACO) was used by the Medicare Payment Advisory Commission (MedPAC) in its 2009 Report to Congress to describe a new Medicare provider classification that would consist of clinically and economically integrated (consolidated) health care entities with which the government would contract for services directly (as opposed to the current practice of contracting for Medicare services through private-sector Medicare carriers and fiscal intermediaries). ACOs were described as consisting of "primary care physicians, specialists, and at least one hospital" responsible for quality and overall annual Medicare spending for their patients, paid on a fee-for-service basis, with a withhold with bonuses or reductions dependent on meeting resource use and quality targets.
MedPAC 2009 Report to Congress: Improving Incentives in the Medicare Program (MedPAC, Wash., D.C., 2009) http://www.medpac.gov/chapters/Jun09_Ch02.pdf
; David Glass and Jeff Stensland, Accountable Care Organizations (MedPAC, Wash., D.C., 2008),http://www.medpac.gov/transcripts/0408_ACO_public_pres.pdf
. See also Taylor Burke and Sara Rosenbaum, "Accountable Care Organizations: Implications for Antitrust Policy, 19 BNA Health Law Reporter, No. 10, p. 358, 359 (3/11/10).
The Patient Protection and Affordable Care Act (HR 3590) (hereinafter the "PPAC") includes both a demonstration project for pediatric ACOs, the details of which will be provided by DHHS rulemaking (Section 2706), and an express recognition of ACOs under the PPAC's Section 3022, adding a new Section 1899 to the Social Security Act (SSA). (See also Section 10307 of the PPAC, authorizing DHHS to implement new payment models for ACOs.) Among the PPAC's requirements for ACOs is the requirement that an ACO "shall have a formal legal structure that would allow the organization to receive and distribute payments for shared savings . . . to participating providers of services and suppliers." PPAC Section 3022, adding a new SSA Section 1899(b)(2)(C). Recognizing the potential impediments to ACO formation presented by the Medicare antikickback statute (SSA Section 1128B) and the federal physician self-referral (Stark) law (SSA Section 1877), the PPAC specifically authorizes DHHS to "waive such requirements of sections 1128A and 1128B and title XVIII of [the SSA] as may be necessary to carry out the provisions of this section." PPAC Section 3022(f). As usual, implementing regulations are to be promulgated by DHHS.
Many health care provider organizations have already begun significant restructuring. These additions will be significant considerations in that ongoing effort. A summary of the PPAC and the full text of the engrossed bill as passed March 21, 2009 may be accessed at http://dpc.senate.gov/dpcdoc-sen_health_care_bill.cfm
. Section 3022, addressing ACO structures and requirements, is at pages 728 - 739.