"Taken together, these changes and numerous others create a more feasible and attractive on-ramp for a diverse set of providers and organizations to participate as ACOs," Dr. Donald Berwick, who heads Medicare, wrote in a commentary released Thursday morning by the New England Journal of Medicine.

George Roman, senior director of health policy at the American Medical Group Association, which represents nearly 400 large provider organizations, said although he had not read the full 696-page rule, he is "cautiously optimistic" about it. The changes are "music to my ears. These are changes that are good. We asked for almost all of these things."

A move to ACOs has been seen as one of the most promising new models of delivering health care since it would reward doctors and hospitals for providing high-quality care to Medicare beneficiaries while keeping costs down. Today, hospitals and doctors generally get paid more for delivering more care, not necessarily better care.

The provision's inclusion in the 2010 health law sparked a frenzied race by providers to join in as quickly as possible. But when the proposed regulation for the program was announced in March, excitement fizzled. Roman said he thinks there's likely to be more interest among AMGA members now than in March, when the group said more than 90 percent of its members would not participate under that rule.

The administration made several concessions to the health industry in the final rule announced Thursday.

Among the key changes:

–Providers will be able to participate in an ACO and share in savings with Medicare without risk of losing money. ACOs will be able to start sharing in the savings earlier rather than letting Medicare retain all the initial savings.

–The number of quality measures that ACOs will have to meet to qualify for performance bonuses was reduced from 65 to 33.

–The ACOs will also be told up-front which Medicare beneficiaries are likely to be part of their system. Under the earlier rule, ACOs would not know which patients were in the ACO until their contract ended.

–Community health centers and rural health clinics will be allowed to lead ACOs. They were left out of the prior proposal.

Also Thursday, the Justice Department and Federal Trade Commission released their final policy statement on ACOs and antitrust issues. The new policy eliminated the mandatory review for a new ACO. But CMS encouraged that provider groups voluntarily seek a Justice Department opinion. The policy also puts the responsibility for gathering market share data on the government, rather than the providers, says David Balto, an antitrust attorney and a senior fellow a the Center for American Progress, a progressive Washington think-tank.

Michael Millenson, president of Health Quality Advisors LLC, compared CMS' rule on ACOs to a card game.  The initial proposed rule, he said, "were too complicated, the money wasn't very good and the cost to enter the game was way too high. What they've done in the final rule is they've simplified the rules, they've sweetened the pot and they've opened up a few new chairs."

Regulators estimate that between 50 and 270 ACOs would be formed in the next three years, affecting the care of 2 million of the 47 million Medicare beneficiaries.

Medicare beneficiaries will be assigned to an ACO based on who their doctor is. If a patient's doctor is part of an ACO, that patient is automatically included, although the beneficiaries can choose to not be included by opting to keep their records outside the ACO system. Unlike beneficiaries in Medicare HMOs, patients in ACOs are free to visit any health care provider, just as they are in the traditional Medicare program. ACOs aim to improve care and save money by having doctors, hospitals and other providers better coordinate their services to among other things reduce unnecessary emergency room use and reduce hospital readmissions.  Actuaries for CMS anticipate that the program could save Medicare $940 million over four years — a drop in the bucket compared to the $2 trillion Medicare anticipates spending during this period. ACO proponents, however, hope that the new organizations would proliferate and be expanded both for Medicare beneficiaries and privately insured patients.

"Accountable Care Organizations can represent a major step forward in transforming Medicare … so it can help assure high quality seamless and less costly care," said Berwick in a conference call with reporters. "This is not just about Medicare, ACOs can be a step forward for the whole health system."

Blair Childs, senior vice president of public affairs at Premier, an alliance that has 77 integrated health systems that are interested in forming ACOs, said the new rule is going to have a big impact on the private market as well.

"The biggest impediment historically is that the old Medicare (fee-for-service) program caused people to stay in the old world" of payments, he said. "No one wanted to make the leap when all of the incentives pulled you in the other directions." Now, the Medicare program will be aligned with where the private market was already heading, he said. 

This article was reprinted from kaiserhealthnews.org with permission from the Henry J. Kaiser Family Foundation. Kaiser Health News, an editorially independent news service, is a program of the Kaiser Family Foundation, a nonpartisan health care policy research organization unaffiliated with Kaiser Permanente.