Health Update

CMS Releases Proposed Rule Governing Accountable Care Organizations

Health Care Organizations Face Complex Strategic Decisions

On March 31, 2011, the Centers for Medicare and Medicaid Services (“CMS”) released a long-awaited Proposed Rule governing accountable care organizations (“ACOs”).  The Proposed Rule will be formally published in the Federal Register on April 7, 2011.  Comments are due by June 6, 2011.  Three other related documents were released simultaneously with the Proposed Rule:

  • CMS and the Department of Health and Human Services Office of Inspector General (“OIG”) issued a regulation waiving the application of fraud and abuse laws to certain ACO arrangements.
  • The Federal Trade Commission (“FTC”) and the Department of Justice (“DOJ”) issued a statement of antitrust policy governing ACOs (the “Policy Statement”).
  • The Internal Revenue Service (“IRS”) issued a notice addressing the application of the tax laws to ACOs in which tax-exempt health care providers participate. 

The Proposed Rule was issued under Section 3022 of the Patient Protection and Affordable Care Act (the “ACA”), which establishes the Medicare Shared Savings Program under which ACOs may operate.  The Shared Savings Program is designed to create a new framework for hospitals, physicians and other health care providers to work together to improve the quality and reduce the cost of health care services covered by Medicare.  Read more