Providers say ACO savings estimates are too high

By Sam Baker - 06/09/11 01:19 PM ET

A large group of healthcare providers is pressing the White House to slash its savings estimates for a new program designed to improve the coordination and quality of care.

The American Medical Group Association said the administration’s hunt for maximum savings could ultimately make the program unsuccessful. The Office of Management and Budget has said the government will save $510 million from the creation of accountable care organizations, which were authorized by the healthcare reform law.

But trying to squeeze so much savings from ACOs could undermine their effectiveness, AMGA said. It encouraged the administration to “book” only $170 million in savings when it conducts its next budget review.

Providers, including doctors and hospitals, have registered strong complaints with ACO regulations recently released by the Centers for Medicare and Medicaid Services. They say the rules are too stringent and will discourage providers from participating in ACOs.

“Including the $510 million median figure in updated budget projections would severely handicap the ability of CMS to consider and implement changes to the proposed rule that would create a viable ACO program,” AMGA said in a letter Thursday.

Richard Foster, the chief actuary for CMS, suggested recently that the White House budget office shaped the proposed ACO regulations to garner the highest possible savings estimates. The cost-cutting emphasis trumped policy experts’ efforts to make the new program attractive to providers, he said.

Even some large clinics that are structured similarly to ACOs, such as the Mayo Clinic, have said they might not take part in the new program if major changes aren’t made to the proposed regulations.

In order to give healthcare providers an incentive to take part in ACOs, the healthcare law says that any savings to Medicare should be split between the government and ACO members. But if the bar to forming one of the new entities is too high, those savings might not come to fruition.