A study commissioned by the American Hospital Association estimates start-up costs for establishing an accountable care organization are many times higher than estimates from the Centers for Medicare and Medicaid Services.

"The analysis indicates that the per organization investment required to put in place and sustain the elements necessary for success is considerably higher--$11.6 to $26.1 million--than the $1.8 million estimated by CMS in its proposed rule for start-up and one year of operating expenses," according to a May 13 letter from AHA to CMS Administrator Donald Berwick, M.D.

The study, from McManis Consulting in Greenwood Village, Colo., identifies 23 different capabilities that must be identified "to achieve the desired transformation in care delivery," according to the AHA. Those capabilities stretch across four broad categories: network development and management; care coordination, quality improvement and utilization management; clinical information systems; and data analytics.

In its letter to Berwick, the AHA suggests that the shared savings that providers would get from an ACO need to be higher than what CMS has proposed. "As we will discuss further in our forthcoming comment letter, CMS should adjust the shared savings rate in recognition of these costs in order to encourage and enable participation in this important program."

AHA's report on ACO start-up and first-year costs is available here.

--Joseph Goedert


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