It's finally here, and it's not 1,000 pages.

On Thursday morning, the Centers for Medicare and Medicaid Services released its long-awaited proposed rules on accountable care organizations.

The year-old Affordable Care Act stipulated the creation of a Medicare ACO program, and the health community has been biting its nails waiting to see what CMS would unleash.

Now, CMS has unveiled the draft rules that the Department of Health and Human Services hopes could save Medicare $960 million over three years.

In principle, ACOs are networks of providers, clinics, long-term care facilities and hospitals that work together to reduce costs and raise quality. The group is then eligible to pocket some of the savings it gets by cutting back on duplicate procedures or keeping chronically ill patients healthy and out of the emergency department.

In a note, CMS describes how the proposed shared savings program will work:

Under the proposed rule, Medicare would continue to pay individual health care providers and suppliers for specific items and services as it currently does under the Original Medicare payment systems. CMS would also develop a benchmark for each ACO against which ACO performance is measured to assess whether it qualifies to receive shared savings, or to be held accountable for losses. CMS is also proposing to establish a minimum sharing rate that would account for normal variations in health care spending, so that the ACO would be entitled to shared savings only when savings exceeded the minimum sharing rate. The amount of shared savings depends on whether on an ACO meets or exceeds quality performance standards. The proposed rule would provide for additional shared savings for ACOs that include beneficiaries who receive services from a Federally Qualified Health Center or Rural Health Clinic during the performance year.

CMS also said ACOs will also be allowed to run in one of two risk-sharing models, in order to help smaller practices that aren't familiar with population risk models.

The rules aren't just about cutting costs -- they also link shared savings with quality metrics in five areas:

· Patient/caregiver experience of care;
· Care coordination;
· Patient safety;
· Preventive health; and
· At-risk population/frail elderly health.

Providers can start signing up Jan. 1, 2012. The ACO must be responsible for 5,000 beneficiaries for three years, CMS said.

Rumors have been circulating about the rules for some time. While well shy of the 1,000-page monstrosity some were fearing, the 429-page document will still take a while for the health care community to digest. The American Medical Association, for instance, said it was withholding comment until it gets to "fully review" the proposed rules. [Read the full rules here: http://www.ofr.gov/OFRUpload/OFRData/2011-07880_PI.pdf]

More Industry Headlines