Obama administration proposes rules for healthcare partnerships

The Obama administration proposed new regulations Thursday to encourage doctors and hospitals to collaborate more closely to improve patient care, a major goal of the sweeping healthcare law the president signed last year.

The much-anticipated rules will reward new partnerships, known as Accountable Care Organizations, that deliver better results for Medicare patients.

The ACO models outlined by the Obama administration will require participating groups of primary care doctors to take responsibility for managing the care of at least 5,000 Medicare patients.

The groups could ultimately save taxpayers hundreds of millions of dollars by helping patients stay healthier and avoid unnecessary complications, according to proponents who view the partnerships as one of the most potentially transformative parts of the new law.


“We’ve known for a long time that too many Americans fail to get the best care,” Health and Human Services Secretary Kathleen Sebelius said Thursday. “It doesn’t have to be this way.”

It remains unclear how many doctors will sign up to start the groups next year.

The Obama administration hopes many of the more than 45 million seniors and others who rely on Medicare will ultimately get their care this way; the administration’s early estimates are that about 1.5 million to 4 million people would participate by 2014, generating about $500 million in savings.

Some doctors fear that the new approach will give an unfair advantage to larger systems that can afford the computerized databases and other resources needed to coordinate care with hospitals and specialists.

American Medical Group Assn. Vice President Chet Speed said the rigorous requirements for running an ACO and the risk of losing money may discourage many doctors from participating. “That’s going to be a difficult pill to swallow for many providers,” he said.

But many experts believe the ACO model could be replicated throughout the nation’s $2.5-trillion healthcare system, a process that has already begun as hospitals, doctors and health plans scramble to form new alliances.

“This is an important step,” former Medicare and Medicaid director Mark McClellan said Thursday.

The partnerships present numerous challenges for federal officials, who spent the last year wrestling with how to encourage coordination without fueling too much consolidation in the healthcare system or repeating the mistakes of previous efforts to get patients into HMOs.

Critics say that could end up limiting patient choices and further driving up costs, a concern voiced repeatedly by insurance companies and others.

In an effort to address monopoly concerns, the Justice Department and the Federal Trade Commission issued a series of guidelines Thursday designed to protect ACOs that have limited market share and subject larger organizations to anti-trust review.

Healthcare experts have long argued that a coordinated approach to medical care offers the best hope for improving quality and saving money.

But while some institutions such as Kaiser Permanente have thrived doing this, the current system rewards hospitals, doctors and other providers for performing more procedures, rather than achieving better results.

Patients often bounce from one doctor to another with little communication between their providers, leading to repeated tests and sometimes grave medical errors.

To make ACO participation worthwhile, the federal government would share savings with the Medicare program that are generated by more coordinated care.

That would mean rewards for providers that can keep down costs by reducing hospitalizations and better managing chronic medical conditions such as diabetes or heart disease. It could ultimately mean losses for ACOs that fail to achieve the savings.

Providers could also lose any savings if they failed to hit quality benchmarks.

Doctors would be required to alert their patients if they join an ACO. But the new rules would allow Medicare patients in an ACO to choose any physician or hospital, even if the provider is outside their ACO.

And unlike an HMO, patients would be able to leave an ACO at any time.

“An ACO will not limit patient choice,” said Dr. Don Berwick, who heads the Medicare and Medicaid programs.