Federal health officials have released the final rule for the creation of Accountable Care Organizations, and they appear to have taken into account nearly all concerns raised by the American College of Physicians regarding earlier drafts.

The ACO program involves a new Medicare payment model that allows physicians and other health care providers, such as hospitals, to band together and cooperatively improve the quality of patient care while reducing overall costs. Participants in an ACO can share in the savings achieved by cooperation, if they meet a number of quality measures.

In the final rule, the Centers for Medicare and Medicaid Services improved the likelihood of physician participation in a number of key areas, according to Dr. Virginia Hood, ACP's president and a professor of medicine at the University of Vermont, and Neil Kirschner, the College's senior associate for regulatory and insurer affairs.

"We're very pleased that almost all of the concerns we had and voiced have been addressed in this final version," Hood said. "This set of regulations is definitely more physician-friendly than the previous one."

Changes made at ACP's behest include:

• Reduction of the number of quality measures from 66 data points to 33 points in the final rule. "The reporting requirements are much less burdensome," Hood said.
• Creation of a new "track" under which ACOs would not be subject to penalties if they don't realize any savings during the term of their first agreement with Medicare. "Under this track, risk is not involved," Kirschner said. "If they demonstrate savings, they will share in the savings. If they don't show any savings, they will not lose." Participating practices would still have some risk in the form of their initial investment in the new organization, but small- and medium-sized practices may be more likely to give ACOs a try if they're shielded from additional risk.
• Implementation of a demonstration project called the Advance Payment Model, under which some physician-owned or rural medical practices will receive advance payment of anticipated savings to help pay for the initial investments needed to form an ACO. "One of the problems with a group of practices forming an ACO is a lack of capital to make the improvements they need to perform as an ACO," Kirschner said. The advance payments would be recouped from savings, but participating ACOs would not be held liable if they don't save enough to pay it all back.
• Alteration of rules to encourage, but not mandate, use of electronic medical records. "Many physicians still do not have electronic medical records," Hood said.
• Creation of new legal protections from antitrust laws and other legislation meant to encourage competition.

"They bent over backward to make it more acceptable for our physicians to form and participate in ACOs," Kirschner said.

Both Hood and Kirschner agreed that physicians should give serious consideration to joining an ACO, given how the program has turned out.

Federal officials expect that 50 to 270 ACOs will be created under the new rules, Kirschner said. Based upon how successful they are, the program could then be expanded.

"We have to look at where the future of medicine is going," Hood said. "The health care costs in this country are simply out of control. We as physicians have to play our part in managing them so all patients can get care that's effective and needed."

Physicians have the potential to prosper under the final ACO rule if they can control costs while maintaining quality of care. "It will allow them to potentially earn more income than under the current fee-for-service system if they can demonstrate the ability to provide better quality, more efficient care," Kirschner said.

"This is the beginning of a sea change," he said. "We're trying to change from a system where payment is based on how much you do to a system where payment is based on the quality and efficiency of what you do."

However, Kirschner provided a series of questions that physicians should seriously weigh before agreeing to join an ACO, including:

• How is their practice expected to be transformed under the ACO?
• How is the ACO going to help them in their practice transformation?
• How are shared savings going to be distributed in the ACO?
• Would they have a role in the governance of the ACO?
• Are they liable for any losses by signing up in the ACO?
• Is the ACO adequately protected from antitrust or anti-competition rules?

"This is not something for the fainthearted," Kirschner said. "Forming or participating in an ACO is still a major task and should be done with considerable thought and analysis."