By Eric A. Klein

Healthcare providers must continue to wait for the Centers for Medicare and Medicaid Services (CMS) to release regulations governing accountable care organizations (ACOs), despite predictions the regulations would be issued last week. The regulations were not forthcoming, possibly due to the tense atmosphere in Washington over the federal budget. ACOs, created by a provision in the healthcare reform law, encourage care coordination by allowing physicians to integrate with other members of the health care system in order to reduce unnecessary costs and improve the quality of care for Medicare fee-for-service beneficiaries.   The regulations should address important open questions about ACOs not answered in the healthcare reform law.

The major industry players have weighed in with their recommendations as to what the regulations should look like. For example, the American Medical Association, as set forth in its ACO policy, believes ACOs should be physician-led and should ensure voluntary physician and patient participation. In a letter to CMS, the American Hospital Association stated it supports the “full use of the flexibility provided in the [healthcare reform law] with respect to how ACOs are structured and governed” and urged CMS to “defer details of the organization, such as the leadership and management structure, to each ACO.” 

Notwithstanding the delay in the issuance of the regulations, healthcare organizations continue to organize ACOs in anticipation of the regulations. One recent example is the announcement by Blue Shield in Northern California that it will be forming two ACOs to provide care to 26,000 enrollees of the San Francisco Health Service System. One ACO, with 21,000 members, will be formed with physician group Brown & Toland and the Sutter-affiliated hospitals at California Pacific Medical Center. The other Blue Shield ACO will include Hill Physicians, Catholic Healthcare West and the University of California San Francisco Medical Center. A prior Blue Shield ACO pilot project was reported to achieve $20 million in savings.

Please check back here for in-depth commentaries on how ACOs and other aspects of the healthcare reform law will impact the healthcare industry. 

For more information, please contact Eric Klein at or (310) 228-3728.