Accountable Care Organizations: Payment Options for ACOs Pursuant to the Proposed Rule

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The Affordable Care Act (the “ACA”) establishes the general requirements for payments to participating Accountable Care Organizations (“ACOs”) pursuant to the Shared Savings Program, described in Section 3022 of the ACA. The ACA provides that ACO participants will continue to receive payment under the original Medicare fee-for-service (“FFS”) program under Parts A and B. In addition, ACOs can receive payment for shared Medicare savings provided that they meet both quality performance standards and demonstrate achievement of savings against a benchmark of expected average per capita Medicare FFS expenditures. On March 31, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released its proposed rule regarding ACOs (the “Proposed Rule”). This blog entry is an overview of the payment options for ACOs set forth in the Proposed Rule. (For a discussion of the legal structure and governance of ACOs, please see our April 11, 2011 entry.)

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