ACO Start-Up Costs
According to a study conducted by the American Hospital Association, the costs associated with starting an accountable care organization (ACO) range from $5.3 million to $12 million. The study was based on a review of the start up costs of four ACOs currently in existence. Additionally, it was discovered that the yearly operating costs in connection with the ACOs were equal to the start up costs, if not more.
The study highlighted several costs that were associated with starting an ACO. One of these costs was incurred by hiring staff to coordinate the ACO’s activities, such as risk management professionals and workers hired to develop and manage a communication network between providers. Another start up cost incurred was that included in recruiting physicians, which ranged from $100,000 to $450,000 per physician. Next, the study found that ACOs spent nearly $3 million a year developing post-acute care networks (i.e. nursing homes, rehab services, and hospice care). Equally expensive were the costs associated with the implementation of EHRs, which cost up to $2.9 million along with an additional $2.5 million for starting up an HIE, plus annual operating costs.
CMS recently announced that it is considering an initiative that would advance a portion of the projected shared savings to ACOs to help with start up costs:
Senators Demand Revision of ACO Regulations
On Tuesday, May 24, seven Senators wrote a letter to Health and Human Services (HHS) demanding that the proposed accountable care organization (ACO) regulations be rewritten. These regulations were created by the Obama administration in an attempt to drive providers to deliver better care while reducing a large volume of unnecessary costs.
This request was sparked by a vast number health care institutions who declared that the regulations which serve to reward them for the quality rather than quantity of care are unfeasible. One major problem that was alluded to was that the proposed regulations require strict quality improvements without offering the appropriate funds for health care facilities to change their current practices. Regulators announced that the proposed ACO regulations are open for public comment and, if deemed to be necessary, can be revised.
For assistance with interpreting the ACO Shared Savings program regulations, or for assistance with creating an infrastructure conducive to ACO participation, please contact a Wachler & Associates attorney at 248-544-0888