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30 Highlights from the ACO Proposed Rule

On March 31, 2011, CMS released the proposed rule implementing the Medicare Shared Savings program and establishing the requirements for Accountable Care Organizations (ACOs) that wish to participate in this program.  The following is a list of some of the highlights from this Proposed Rule.

1. The proposed rule contemplates two models: a “one-sided” model in which providers do not share risk and a “two-sided” model in which providers share in risk and realize greater return on the shared savings.

2. ACOs must commit to participate in the shared savings program for three years.  Providers who select the “one-sided” option will need to agree to share risk in their final year of participation.  If an ACO wants to terminate early, they will need to give a 60 day notice to CMS, as well as a notice to beneficiaries, and will forfeit a portion of previously earned shared savings that was withheld by CMS.

3. A primary care ACO participant can only participate in one ACO, while specialists and hospitals will be able to participate with multiple ACOs.  ACO participates will be defined by tax identification number (TIN).  The proposed rule clarifies that a primary care provider or supplier could potentially be affiliated with more than one TIN and, thus, could participate in more than one ACO.

4. Participants in the Medicare Shared Savings program may not participate in other Medicare programs that involve shared savings, such as the Independence at Home project or other models created by the CMS Innovation Center.  This determination will also be made based on TIN number rather than NPI number.  That is, providers could participate through more than one entity with separate TIN numbers.

5. An ACO must have shared governance which provides all ACO participants with appropriate proportionate control over the decision making process.  ACO participants must have at least 75 percent control of the governing body.

6. ACOs must also allow Medicare beneficiaries to participate in governance.

7. An ACO must have a leadership team which has demonstrated the ability to influence or direct clinical practice to improve efficiency processes and outcomes.

8. ACOs must have physician-directed quality assurance and process improvement committees.

9. An ACO must develop and implement evidence-based medical practice or clinical guidelines and processes for delivering care consistent with the goals of “triple aim” (better individual care, better population health and lower costs).

10. ACOs will need IT infrastructure to allow for collection and evaluation of data.

11. Beneficiaries will be assigned on a retrospective basis – based on which primary care physician they receive a plurality of primary care services from during the calendar year in question.

12. CMS will pay ACOs directly and the ACOs will establish a structure for distributing the shared savings among participants.

13. An ACO must take accountability for at least 5,000 Medicare beneficiaries. If an ACO’s assigned population falls below 5,000 during the program, the ACO will receive a warning and be placed on a corrective action plan.

14. ACOs will be required to demonstrate patient centeredness principles.

15. Beneficiaries will retain freedom of choice and any marketing from an ACO will be reviewed by CMS to ensure that it does not mislead beneficiaries into thinking that they must forfeit their freedom of choice.

16. Each ACO must have a compliance plan that meets certain criteria set forth by CMS, including without limitation, a compliance officer, training programs, and reporting mechanisms.

17. Although patients will be assigned retrospectively, CMS will also provide ACOs with historical data to determine their expected beneficiary population.

18. Beneficiaries must be given the right to “opt-out” of certain data sharing between CMS and the ACO and must be notified of this right.

19. In the course of a 3 year agreement ACOs cannot add participants (TINs), but can delete participants and can add or delete NPIs (e.g., a provider leaves their group practice).

20. If an ACO is terminated voluntarily or involuntarily during the initial three year commitment, they cannot reapply as an ACO until that time period is over.

21. ACOs must post signs in facilities of participating providers/suppliers and must give written information/notice informing patients of the ACO’s participation in the Medicare Shared Savings Program.

22. CMS has proposed 65 initial quality benchmarks. Many of these are identical to the “meaningful use” criteria in the EHR incentive program or PQRS benchmarks. In the initial year, CMS is considering judging ACOs only on the accuracy of their reporting, rather than actual measures.

23. If an ACO meets quality benchmarks, it will be eligible for shared savings of either 50% or 60% depending on whether the ACO has agreed to participate in risk of losses.

24. Most ACOs will have to reach a net savings threshold before sharing begins, although certain ACOs are excepted from this requirement if they are small, rural, and non-hospital based.

25. CMS is proposing to withhold 25% of all shared savings payments to ACOs in order to protect the program in the event that the ACO owes money to CMS as part of the shared losses.

26. ACOs believed to be avoiding “at risk” beneficiaries will be put on a corrective action plan.

27. CMS will establish a fair administrative process for denial of applications, termination, etc. The proposed process will include an in person/telephone reconsideration and another level of written review.

28. The FTC has issued guidance creating a safety zone for ACOs that have less than 30% market share and an expedited review process for those above 30%. ACOs with greater than 50% market share will be required to obtain an expedited review and provide an approval letter to CMS with their application.

29. CMS and the OIG are proposing to waive the requirements of the Stark law, the Anti-Kickback statute and the Gainsharing CMP as they relate to payments made by an ACO to its participants resulting from the Medicare Shared Savings program.

30. Applications are expected to be approved or denied at the end of the calendar year in which they are submitted. The start date is expected to be January 1 of each year, but for the first year, CMS is considering allowing some entities to begin on July 1 and to commit to a 3 ½ year term

While the Medicare Shared Savings Program is just one of many new payment programs included as part of the Affordable Care Act, what sets the Medicare Shared Savings Program apart is that this is not a demonstration program. This is a permanent program that will allow providers who join eligible ACOs to share in savings provided that they can meet the necessary quality measures and create savings. However, the payment methodologies may develop over time. While not every ACO will be chosen for inclusion in the Medicare Shared Savings Program, this new program creates interesting possibilities for providers who wish to focus on quality and cost savings. If you are interested in submitting comments regarding the proposed rule or would like assistance in forming an ACO, please contact Andrew Wachler, Amy Fehn or Alicia Chandler.