CMS Releases Proposed Rules for Accountable Care Organizations

The U.S. Department of Health and Human Services (HHS) has released proposed new rules for public comment which will help doctors, hospitals, and other health care providers better coordinate care for Medicare patients through Accountable Care Organizations (ACOs). 

ACOs will be administered by the Centers for Medicare and Medicaid Services (CMS).  HHS will conduct a series of open-door forums during the comment period to help the public better understand the ACO concept and to encourage participation in the formal comment process. Patient and provider participation in an ACO is purely voluntary.

ACOs create incentives for health care providers to work together to treat an individual patient across care settings – including doctor’s offices, hospitals, and long-term care facilities. The Medicare Shared Savings Program will reward ACOs that lower health care costs while meeting performance standards on quality of care.  

Under the proposal teams of doctors, hospitals, and other health care providers and suppliers working together would coordinate and improve care for patients with Original Medicare.  Those in Medicare Advantage private health plans are not included. To share in savings, ACOs would meet quality standards in five key areas:

  • Patient/caregiver care experiences
  • Care coordination
  • Patient safety
  • Preventive health
  • At-risk population/frail elderly health.

The proposed rules also include strong protections to ensure patients do not have their care choices limited by an ACO.

If ACOs save money by getting beneficiaries the right care at the right time – for example, by improving access to primary care so that patients can avoid a trip to the emergency room – the ACO can share in those savings with Medicare.  ACOs that do not meet quality standards cannot share in program savings, and over time, those who do not generate savings can be held accountable. 

The new program will be established on January 1, 2012.  Before the rule is finalized, CMS will review all comments from the public and may make changes to its proposals based on those comments.

CMS has worked closely with other federal agencies, including the Department of Health and Human Services Office of Inspector General (OIG), the Department of Justice (DOJ), the Federal Trade Commission (FTC), and Internal Revenue Service (IRS) to ensure that providers and suppliers have the clear and practical guidance they need to form ACOs without running afoul of the fraud and abuse, antitrust, and tax laws. Concurrently with the publication of the ACO proposed rule, the following documents have been issued:

  • a joint CMS and OIG notice and solicitation of public comments on potential waivers of certain fraud and abuse laws in connection with the Medicare Shared Savings Program; 
  • a joint FTC and DOJ proposed antitrust policy statement; and 
  • an IRS notice requesting comments regarding the need for additional tax guidance for tax-exempt organizations, including tax-exempt hospitals, participating in the Medicare Shared Savings Program.

The proposed rules are just one piece of a broader effort by the Obama Administration to improve the quality of health care for all Americans.  On March 21, HHS announced the first-ever National Quality Strategy, which will serve as a tool to better coordinate quality initiatives between public and private partners.  In addition, the Affordable Care Act established a new Center for Medicare and Medicaid Innovation that will test innovative care and service delivery models.  CMS is currently exploring how the Innovation Center will test alternative payment models for ACOs. 

The proposed rule and joint CMS/OIG notice are posted at:  For more information, read the fact sheet at

Comments on the proposed rule will be accepted for 60 days.  CMS will respond to all comments in a final rule to be issued later this year. 

The Proposed Antitrust Policy Statement is posted at:

The IRS Guidance and Solicitation of Comments will be posted at:

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