Doctors prepare an operating room. Photo: Arne Dedert/picture alliance via Getty Images

The Trump administration on Friday eased up on groups of hospitals and doctors called "accountable care organizations," which were created by the Affordable Care Act, in a regulation that will allow those companies to retain more money if they hold Medicare costs down and keep patient quality high.

The bottom line: The agency that oversees Medicare is still requiring these networks to take on more financial risk. But it's now backpedaling from some of the proposed rules, and as a result, it expects fewer hospitals and doctors to leave the program.

The details: Next year, the federal government will still push groups of hospitals and doctors to both keep savings from lower Medicare spending and pay out financial penalties back to the government if they spend above Medicare's targets.

  • However, some groups can still apply to only keep savings, and the amount of savings those groups can retain (40%) will be larger than what was proposed (25%).
  • Companies will also have an extra year before they have to switch to a program that includes penalties.
  • Medicare expects the rule will save the federal government $2.9 billion over the next 10 years.

Yes, but: Accountable care organizations are saving money, but the savings are very low relative to the size of what Medicare spends every year.

Go deeper: Today's full 957-page rule.

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Dan Primack, author of Pro Rata
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