Hospital chains such as Community Health Systems Inc. may get as much as $1.9 billion in bonuses by forming joint ventures to improve care and cut health-care costs under regulations released by the Obama administration.
The U.S. Department of Health and Human Services issued final rules today for so-called accountable care organizations for the elderly and disabled, a centerpiece of the health-care law designed to save as much as $940 million in the next three years. Savings would be shared between providers and the government.
Participants will share savings and no longer have to return money to the government when they fail to reach savings targets, and will need to meet about half as many quality measures as the U.S. first outlined in March. The delayed rule marks a victory for hospitals, clinics and large doctors’ practices that have lobbied to alter draft regulations they viewed as too burdensome and financially risky.
“We’ve been able to fine-tune and improve these rules so they better meet the needs of stakeholders, most importantly patients and the people who care for them,” Donald Berwick, administrator of the agency that runs Medicare said in a briefing today.
The government projected as many as 270 organizations would participate in the program aiming to coordinate care for large groups of Medicare patients and reduce costs through improved efficiency.
Medicare will offer additional financial support to physician-owned and rural providers that want to participate to build digital health systems.
Thomas Scully, who managed Medicare under George W. Bush and is senior counsel at Alston & Bird LLP, said Medicare officials “did their level best to respond to the criticisms and get the thing rolling. I think there’s still plenty of interest out there.”
The program is modeled after integrated health systems such as the Cleveland Clinic that deliver more efficient care. Those providers panned this year the proposed rules as overly prescriptive.
Hospitals complained that setting up the joint ventures as the government originally envisioned would have required as much as $11.6 million in initial investments for a 200-bed hospital.
Investor-owned hospital systems, represented by the Federation of American Hospitals, had criticized requiring antitrust reviews before companies could participate, saying it would be “a significant deterrent” to participation.
The Obama administration considers the ventures essential to reducing the growth of spending for the federal health insurance program, which accounts for 15 percent of the U.S. budget and is projected to increase with the retirement of Baby Boomers and increased use of medical services.
The government would waive some antifraud statutes for qualifying groups, including laws that forbid doctors from referring patients only to hospitals and other providers with which they have financial stakes.
Insurance groups, among other critics, are concerned the creation of market providers that dominate local markets could suppress competition and drive up costs.
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