The American Hospital Association says start-up and management costs for an accountable care organization are considerably higher than estimated by the Centers for Medicare and Medicaid Services in its proposed rule.
An AHA study, released on May 13, estimates that it would cost between $11.6 million and $26.1 million to launch an ACO and manage it for the first year – far higher than the $1.8 million estimated by CMS. AHA officials said they alerted CMS Administrator Donald Berwick of the findings.
[See also: ACOs key to healthcare overhaul, Berwick says.]
"CMS' estimate falls short of the mark," said Rich Umbdenstock, president and CEO of the AHA. "The shared savings rate with ACOs should be adjusted to reflect these costs in order to encourage and enable participation in this important program."
The study identified 23 different capabilities that must be developed across four categories to achieve the desired transformation in care delivery:
- network development and management;
- care coordination, quality improvement and use management;
- clinical information systems; and
- data analytics.
[See also: Payers, providers agree - and disagree - on ACOs.]
According to the AHA, information gathered from four case studies was used to create two hypothetical examples to estimate the start-up and ongoing costs of establishing an ACO. The first represents a single free-standing hospital, 80 primary care physicians and 250 specialists. The second example includes a five-hospital (1,200-bed) system, 250 primary care physicians and 500 specialists.
The study was prepared for the AHA by McManis Consulting of Greenwood Village, Col., and is based on a series of case studies of organizations that have already taken steps to manage the care of a defined population in a manner similar to that of an ACO.
The study was completed prior to the release of the proposed ACO rule and does not include estimates of the costs of meeting requirements specific to the Medicare Shared Savings Program, according to the AHA.
The report can be found here.
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