The Patient Protection and Affordable Care Act's Accountable Care Organization Program: New Healthcare Disputes and the Increased Need for ADR Services

By Ronai, Stephen E. | Dispute Resolution Journal, August-October 2011 | Go to article overview

The Patient Protection and Affordable Care Act's Accountable Care Organization Program: New Healthcare Disputes and the Increased Need for ADR Services


Ronai, Stephen E., Dispute Resolution Journal


This article discusses the Accountable Care Organization (ACO) concept enacted by Congress in the 2010 Patient Protection and Affordable Care Act, as well as its objectives in improving patient care at lower cost, and the incentives it offers to healthcare providers to meet those objectives. It also addresses the implementation of the ACO patient-care performance rules proposed by the Centers for Medicare and Medicaid Services. In addition, it considers the various types of legal issues that could lead to disputes and generate a need for ADR ser vices.

On March 31, 2011, the Centers for Medicare and Medicaid Services (CMS) announced proposed rules1 implementing the Accountable Care Organization (ACO) provision in Section 30222 of the Patient Protection and Affordable Care Act (Affordable Care Act),3 a component of the Medicare Shared Services Program (MSSP). Section 3022(a)(1) provides, in part:

(a) Establishment-(1) In general-Not later than January 1, 2012, the Secretary shall establish a shared-savings program (in this section referred to as the "program") that promotes accountability for a patient population and coordinates items and services under parts A and B, and encourages investment in infrastructure and redesigned care processes for high quality and efficient service delivery."4 (emphasis added)

Restated concisely, ACOs approved by CMS will operate with CMS supervision under CMS rules and will be implemented to achieve these goals: (1) better health, and (2) better care at (3) lower cost. The proposed CMS rules clarify how ACOs under the Affordable Care Act could improve coordination and communication among doctors and hospitals, improve the quality of care that their patients receive, and also help to lower costs.

This article discusses the objectives of Section 3022's ACO provisions and the incentives they offer hospitals, physicians and other healthcare providers to meet those objectives. Most new statutes have the potential to generate disputes involving their interpretation and application, but this is especially true of the highly complex Affordable Care Act, with its numerous requirements, the lengthy implementing CMS regulations, and the important determinations that the CMS must make with regard to ACO performance un der the CMS regulations. This article discusses the many kinds of disputes that could arise between ACOs and their physician participants and suggests that ACOs take steps to provide for alternative dispute resolution (ADR) processes to resolve them.

A Brief History of ACOs

Prior to the enactment of the Affordable Care Act, government agencies and informed private healthcare advocates, concerned about our costly healthcare system, investigated the need for innovative physician/hospital collaborative working relationships that could help promote im proved patient care at lower cost. They recommended that the ACO concept be included in focused legislative healthcare reform alternatives. One of these reports, a 2003 evaluation report issued by the Medicare Payment Advisory Commission, which echoed the concerns about the overutilization and the cost of our healthcare system, attracted the attention of noted healthcare academics, among them Dr. Atul Ga wande,5 a faculty member at Harvard Medical School, and a recognized analyst and critic of this system. Dr. Gawande drew attention in his writing to the importance of creating small peer-review committees made up of medical staff members that would meet regularly to review pa tient charts, share opinions, and ask questions about the condition of each patient. He suggested that this collaborative committee, which allows for integrated diagnoses and treatment options, could help identify and reduce the number of unnecessary operations, the incidence of hospital-acquired con ditions, and other common problems. Dr. Gawande emphasized that peer-review practices have proved to be successful at several famous not-for-profit institutions, including the Mayo Clinic in Minnesota, the Geisinger Health System in Penn sylvania, the Marshfield Clinic in Wisconsin, Intermountain Healthcare in Utah, and Kaiser Permanente in California. …

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