One year after Congressional passage of health care reform, recommendations centered around the more far-reaching elements of the legislation are beginning to emerge. One proposal biopharma companies cannot afford to ignore is tied to Medicare-sanctioned accountable care organizations (ACOs), which implement the "shared savings program" mandated by the Affordable Care Act. In a widely-anticipated document authored by the Centers for Medicare and Medicaid Services (CMS) and released March 31, the federal agency outlines a new payment model that could help solve one of the biopharmaceutical industry's thorny problems, drug compliance, which if improved, would likely boost product sales.
As outlined, the program represents a major change in the way Medicare pays for medical products and services, using financial incentives to provide higher quality and more coordinated health care through a networked group of physicians and hospitals. Encompassing hospital and physician care (including physician-administered drugs) that fall under Medicare Parts A and B, ACOs would care for fee-for-service beneficiaries and both provider and beneficiary participation would be completely voluntary. The proposal is based on a shared savings concept, in which an ACO would receive a bonus payment if cost and quality benchmarks are met but also risk payment reductions if they are not
