The Patient Protection and Affordable Care Act that was promulgated in March, 2010, includes provisions for creating Accountable Care Organizations (“ACO”). An ACO is an “organization” that is intended to manage the care of a minimum of 5,000 Medicare beneficiaries, with the purpose of improving outcomes to those beneficiaries. In the event an ACO is capable of achieving that goal, the resulting savings to the Medicare program will be shared by the federal government and the ACO.

How an ACO may be structured is left to the imagination and ability to appropriately structure an ACO arrangement. The federal government has not identified what an ACO structure must be. It may, for example, include relationships among hospitals, physicians/physician organizations, home health agencies, rehabilitation agencies, or any single or a combination of any of these types of providers. An ACO may even contain a payer component.

The Centers for Medicare and Medicaid Services (“CMS”) has agreed to entertain suggested arrangements and potential “safe harbors” from various stakeholders in the health care provider industry. Stakeholders are interested in what protections, if any, CMS and, perhaps, the Office of Inspector General “(OIG”) may give to these arrangements. The question of protection arises because the sharing of payments among physicians and those health care providers to whom physicians refer patients implicates numerous potential issues under the Stark law and the state and federal anti-kickback statutes. Additionally, if physician groups who are competitors may be considering participating in the same ACO, other regulatory issues might arise under the antitrust laws. Accordingly, government protection is of great interest to individuals and entities that may want to participate in an ACO arrangement.

The question that many providers face is whether they should be on the forefront of the determination of how ACO’s might look, or whether they should “sit back” and let the “dust settle” before embarking on the development of any ACO arrangement. There are pluses and minuses related to taking either one of these positions. Whether a health care provider should be proactive or “sit back” may depend on its strength of ability to negotiate and the leverage it holds in the market place. In any event, it is hopeful that proposed ACO regulations will be released in the first half of this year. Hopefully, federal government guidance on what might be acceptable ACO arrangements will be helpful. Many stakeholders eagerly await the issuance of these proposed rules.