The proposed CMS rules for accountable care organizations have only been out a few hours and even the speediest readers are still plowing through them, but a few initial observations are in order:

  1. CMS is admitting it needs more than the usual amount of public comment to craft final rules. Perhaps this was intentional but little of what I’ve read so far adds much definition to what PPACA already said about ACOs. CMS is asking the healthcare industry to help it write a rule that so many had been waiting for.
  2. Although I was initially impressed by the Obama Administration’s ability to get rules issued by CMS, IRS, DOJ and FTC all on the same day, now I’m not so sure. Why would CMS say that an ACO could be a pre-existing entity like a hospital that employs many physicians and other health professional, and then require that ACO participants (defined as Medicare-enrolled providers and suppliers) have no less than 75 percent control of the ACO’s governing board (page 57 of CMS-1345-P). That might work in the for-profit world, but since most U.S. hospitals are tax-exempt non-profits, they are subject to the community control provisions set forth by the Internal Revenue Service. It is a rare non-profit hospital that has more than a few percent of its board in the hands of health care providers. Perhaps CMS had a different pre-existing entity in mind, but it specifically says that hospitals won’t have to form a separate ACO entity unless they want to.
  3. The proposed ACO waiver rule (that would shield providers from liability under Anti-Kickback, Stark and CMP) is a mercifully short 25 pages, but leaves the reader wondering whether it provides any substantive relief from these criminal and civil sanctions. The Office of the Inspector General admits that this rule cannot take final form until CMS published final rules on what the Medicare Shared Savings Program (MSSP) will look like (obviously not anytime soon). Then it goes on to say that scope of the proposed waivers will only apply to distributions of shared savings that are for activities that are “necessary for and directly related to the ACO’s participation in and operations under the MSSP.” There is no definition of what is necessary and directly related, so we really come back to where we started.

It’s still early here on the East Coast, so this massive document may become more meaningful as the day goes on. Subsequent posts may answer that age old question “Where’s the beef?”