Navigant Assesses Final ACO Regulations

Final ACO Rule Will be More Palatable to Physicians and Hospital Financial Executives

CHICAGO--(BUSINESS WIRE)-- Navigant (NYSE: NCI) announced today its assessment of the final ACO Rule published on October 20, 2011, by the Department of Health and Human Services. Accountable care organizations (ACOs), a centerpiece of health reform legislation, are intended to deliver high-quality, cost-efficient health services by integrating treatment among providers.

The final ACO rule reduces by half the quality performance standards proposed in preliminary rules, eliminates penalties for providers that fail to achieve quality and cost targets, enhances bonuses for providers that do achieve them, and relaxes some electronic health record standards. The first Medicare ACO agreements will begin April 1, 2012.

“There is an improved framework in the final ACO rule, with potential to make the system work. Clinical integration is complex and a large investment, but when done right can garner benefits for both patients and providers,” said Alex Hunter, Managing Director at Navigant Healthcare. “What remains to be seen is how healthcare organizations choose to develop an ACO as they seek to design, develop and implement solutions that create high-performing healthcare organizations.”

Navigant professionals have assessed the final ACO rule and identify these positives:

  • List of Beneficiaries. It’s difficult to manage the health of people you don’t know. As a result, the new rules provide that Centers for Medicare and Medicaid Services (CMS) will give ACOs a list of “probable beneficiaries” eligible for care, with quarterly updates. Beneficiaries cannot “sign up” voluntarily but will be assigned according to whether ACO members are their primary care physicians or have provided other professional care.
  • Shared Savings. Setting up ACOs will be expensive, but the rules offer a new “Advance Payments” option to ACOs lacking capital reserves or needing to cover short term losses. ACOs will be allowed to share in every dollar of savings once minimum savings are achieved. The minimum savings will be based on the number of beneficiaries served without losing money. More importantly, shared losses are removed from track 1.
  • Quality Metrics. The number of quality measures that ACOs will have to meet to qualify for bonuses was reduced by half (from 65 to 33) with a longer phase-in which appeals to most providers. ACOs will receive pay for reporting in year one and pay for reporting and performance in years two to three.
  • Financial Commitment. Healthcare organizations creating ACOs must commit to handling the costs and managing them appropriately.
  • Physician-Hospital Alignment. The success of an ACO will, in large part, be measured by how physicians are engaged in the process as they align with hospitals since physicians are actively managing patient outcomes.
  • Rural Health Centers. Community health centers and rural health clinics, which were left out of the prior proposed ACO rule, will be allowed to lead ACOs, bringing the benefits of accountable care to smaller areas.
  • Timeline. CMS has relaxed the timeline, allowing healthcare organizations to apply for the launch of ACOs throughout 2012.

Navigant Healthcare ( assists health systems, physician practice groups and payers in designing, developing and implementing solutions that create high-performing healthcare organizations. Navigant’s experienced healthcare team of more than 500 healthcare consultants helps organizations with strategic advisory, operational improvement, and outsourcing and technology solutions. Specific services include revenue cycle management, supply chain improvement, facilities planning, physician-hospital alignment, care innovation and clinical documentation improvement.

About Navigant

Navigant (NYSE: NCI) is a specialized, global expert services firm dedicated to assisting clients in creating and protecting value in the face of critical business risks and opportunities. Through senior level engagement with clients, Navigant professionals combine technical expertise in Disputes and Investigations, Economics, Financial Advisory and Management Consulting, with business pragmatism in the highly regulated Construction, Energy, Financial Services and Healthcare industries to support clients in addressing their most critical business needs. More information about Navigant Consulting can be found at


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