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IRS ruling on ACOs not a disaster

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Paul Keckley, the well-known healthcare analyst, tells providers and others not to unduly worry about the  Internal Revenue Service’s affirming that for purposes of coordinating care for Medicare enrollees,  Accountable Care Organizations do not threaten an institution’s tax-exempt status, but if serving commercially insured populations, there may be a problem.

But Mr. Keckley writes: “Here’s my take: ACOs are here to stay.

“Clinically integrated networks of providers that assume risks for quality and costs are the future, whether serving Medicare, Medicaid or commercial populations. Twenty-eight million patients are served through an accountable care model; their numbers will swell as insurers and employers drive attention to the model.

“No doubt, CMS will continue to alter its measures of quality; the 34 measures in use this year include four that are new.”

{But} “While this private letter ruling is likely to cause some to push the pause button on their ACO activities, it will not be a permanent slowdown. In fact, a number of hanging chads about ACOs need to be addressed — how enrollee attribution is calculated and risks scored, how savings can be shared including the possibility an enrollee might share along with providers and business partners, how quality is measured and so on.

“For tax-exempt hospitals, proceed with caution: A focus on Medicare and Medicaid ACO enrollment seems safe, while parallel efforts targeting employers and insurers should be carefully monitored but not suspended.

“In the end, the reality is that the IRS curveball will not lead to a strikeout for ACOs. Like so much of what’s done in the name of innovation in healthcare, the rules are constantly changing, or even unknown, but the goal of winning the game is clear.”



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