Changes seek to save key aspect of healthcare law


The Obama administration moved Thursday to salvage a much-touted initiative in the new healthcare law aimed at controlling costs, revising regulations to encourage doctors, clinics and hospitals to take greater responsibility for improving patients’ care.

The new rules will reward healthcare providers who form partnerships to reduce the cost of caring for Americans on Medicare while also boosting quality, two goals of the sweeping overhaul the president signed last year.

The partnerships — known as Accountable Care Organizations, or ACOs — have been touted by many experts as one of the most promising remedies for the poor outcomes and high costs that bedevil the American healthcare system.


Proponents believe the partnerships could ultimately save taxpayers billions of dollars by better coordinating patients’ care and replacing the current fragmented system in which patients often bounce between doctors and hospitals with little communication.

“ACOs … can represent a very big step forward in helping to transform Medicare, Medicaid and the Children’s Health Insurance Programs so they can help assure high-quality, seamless and less-costly healthcare,” said Dr. Donald Berwick, who oversees the programs for the federal government and directed work on the new rules.

The model outlined by the Obama administration would require participating groups of doctors, clinics and hospitals to take responsibility for managing the care of at least 5,000 Medicare patients.

Medical providers that reduce the cost of caring for these patients while ensuring high quality could share any savings with the Medicare program.

Spurred in part by the new healthcare law, private insurers, hospitals and doctors are already exploring these kinds of shared-savings partnerships in the private sector.

But the Obama administration wrestled with how to entice providers to join the Medicare ACO program. The administration’s first proposal in March was criticized as too demanding.

The new rules released Thursday ease many requirements, drawing praise.

“There certainly have been some significant and noteworthy changes,” said George Roman, senior health policy director at the American Medical Group Assn., which represents physician groups. Roman called the initial proposal in March “god-awful.”

Initially, between 50 and 270 ACOs may sign up for the program and save the Medicare program about $470 million over four years, according to estimates from independent government actuaries.

That is slightly less than previously estimated savings, which reflects looser rules.

The Obama administration reduced the number of quality measurements that providers will have to report from 65 to 33 and eased a requirement for using electronic medical records.

The administration also created a system to allow doctors and other providers to sign up without taking responsibility for paying back Medicare if they don’t produce savings. Providers who agree to assume the additional risk of cost overruns will be able to get bigger rewards.

“We have made changes in response to what we heard,” Berwick said.

In response to criticism from hospitals and others, the Obama administration also loosened proposed rules that would have subjected ACOs to more stringent antitrust reviews to prevent hospitals and doctors from forming monopolies in their markets and driving up prices.

But the looser standards announced Thursday drew a frosty response from insurance companies and employer groups.

“It is essential that ACOs not exert such undue market power that they could dictate higher prices to healthcare purchasers and consumers or restrict access to healthcare providers for Medicare beneficiaries,” said James A. Klein, president of the American Benefits Council, which represents employers that provide health benefits.