20 Notable Aspects of the Final ACO Rule

On October 20, 2011, CMS released the much awaited final rule for implementation of the Medicare Shared Savings Program for providers and suppliers participating in Accountable Care Organizations (ACOs). The following are 20 notable aspects of the final rule:

•1. While the proposed rule would have required all ACOs to share risk of loss in the final year of the three year participation period, the final rule created an alternative for a “shared savings only” track (one-sided model) that will not require any sharing of losses. The final rule also retains the proposed two-sided model that will allow ACOs to share in an increased portion of savings, so long as the ACO also agrees to share in any losses to the program.

•2. The final rule will allow ACOs beginning in April 1, 2012 or July 1, 2012 to have a longer first performance year (21 months or 18 months respectively) and an option to receive an interim payment calculation following the first 12 months of participation. One-sided ACOs receiving an interim payment will be required to demonstrate a self-executing repayment mechanism similar to that which the two-sided ACOs must demonstrate.

•3. CMS will continue to require that an ACO be a separate legal entity with a distinct TIN (eliminating the ability to form ACOs solely through contractual joint ventures), but will allow ACOs to be formed under tribal or federal law, rather than being confined to state law.

•4. CMS affirmed its position that it will not require ACOs to distribute shared savings in any particular way and will, instead, require ACO participants to negotiate and determine among themselves how to equitably distribute shared savings.

•5. CMS will no longer require each Participant to be represented on the governing body, but will instead require an ACO to provide “meaningful participation” for ACO participants or their designated representatives in the composition and control of the ACO’s governing body. ACOs will continue to be required to give ACO Participants 75% control.

•6. CMS is allowing ACO’s increased flexibility in the establishment of governing bodies and will not require representation of particular categories of providers and suppliers or other stakeholders. ACOs will continue to be required to have beneficiary representation on the board, but there will be an option to allow for innovative ways of involving beneficiaries in ACO governance.

•7. CMS will continue to retain the flexibility to change the rules during the participation period, but ACOs will be given the option to terminate early if the ACO feels that a change in rules will impact its ability to participate.

•8. CMS will now allow ACOs to add or subtract providers/suppliers over the course of the agreement period, but the ACO must notify CMS of a “significant change”. Changes could potentially require adjustment of the ACO’s benchmark or could cause the ACO to no longer meet eligibility requirements (e.g., could cause assignment to fall below 5,000 beneficiaries).

•9. ACOs will no longer be required to have a mandatory antitrust review, but will be given the opportunity for a voluntary expedited review.

•10. ACOs will be permitted to contact prospectively assigned beneficiaries to notify them of their intent to request the beneficiaries’ identifiable data and give the beneficiaries the option to opt-out.

•11. CMS will establish a “crosswalk” of primary care HCPCS codes to revenue center codes used by FQHCs and RHCs so that services can be included in the ACO assignment process.

•12. CMS is revising the beneficiary assignment process to reflect a “step-wise” approach. First, the beneficiaries will be assigned on the basis of utilization of primary care services by primary care physicians (based on plurality of allowed charges), but beneficiaries who are not seeing a primary care physician may be assigned to an ACO on the basis of primary care services provided by specialists or non-physician providers (based on plurality of allowed charges).

•13. CMS will provide a list of beneficiaries likely to receive care from the ACO on a prospective basis, which will be updated periodically on a rolling basis. The list would be reconciled at the end of the performance year so that only beneficiaries who were actually assigned to the ACO are included in Shared Savings calculations.

•14. CMS refused to adopt a “threshold standard” for assignment of beneficiaries, which would have required that even beneficiaries who receive very few services from an ACO will be assigned to the ACO if they receive a plurality of primary care services from the ACO. CMS will instead use the step-wise approach discussed above.

•15. CMS reduced the number of quality measures required by removing certain measures determined to be redundant or overly complex or burdensome. The measures have been reduced from 65 to 33.

•16. The demonstration of meaningful use of EHRs by the ACO’s primary care physicians is no longer a requirement; rather, EHR use is a quality measure that is weighted higher than other quality measures.

•17. CMS will make additional risk adjustments based on ESRD, disabled, aged/dual eligible and aged non-dual eligible beneficiaries.

•18. CMS will allow for sharing on first dollar savings for ACOs that meet or exceed the Minimum Savings Rate (MSR).

•19. CMS eliminated the 25% withhold of shared savings and the forfeiture for early termination from the program.

•20. CMS retained the requirement for ACOs to have a compliance program and added a requirement that “probable” violations of the law should be reported to law enforcement. CMS also clarified that, while a compliance officer may have a legal education, the compliance officer must be a different individual than the ACO’s legal counsel.

CMS also clarified certain misconceptions about its comments to the proposed rule, including a clarification that any and all groups of providers and suppliers that meet the eligibility requirements will be permitted to participate in the shared savings program. CMS also clarified that providers providing primary care services on which assignment is based (including physicians, specialists providing primary care services and non-physician providers such as NPs and PAS) must be exclusive by TIN, but not by NPI. In other words, a primary care physician or other individual whose primary care services are a basis for assignment can participate in more than one ACO individually, but group practices that provide primary care services upon which assignment is based must be exclusive to one ACO.

If you need assistance creating, implementing, or overseeing an ACO, please contact a Wachler & Associates attorney at 248-544-0888.