On March 31, 2011, the Centers for Medicare & Medicaid Services (CMS) issued a proposed rule implementing the Medicare Shared Savings Program, which Congress established in the Affordable Care Act (ACA). The Medicare Shared Savings Program is a significant Medicare delivery reform initiative that focuses on enhanced coordination of patient care as a means of improving quality and controlling health care costs. The Program provides financial incentives to health care providers and suppliers that work together to furnish coordinated, high quality, cost-effective care to Medicare fee-for-service beneficiaries through accountable care organizations (ACOs). This regulation is the first major health delivery reform initiative in the aftermath of the passage of the ACA.
The release of the rule was accompanied by three documents issued by other government agencies: a joint CMS and OIG document addressing waivers of certain fraud and abuse laws related to the Medicare Shared Savings Program; an IRS notice soliciting comments regarding the need for additional tax guidance for tax exempt entities participating in the Shared Savings Program; and a proposed Antitrust Policy Statement issued by the Antitrust agencies. These joint releases signal the efforts of the government to coordinate the approach of the various stakeholder agencies to issues associated with the implementation of the Program.
Comments on the proposed rule are due to CMS by June 6, 2011, and the program will be implemented on January 1, 2012.
About ACOs
An ACO is a separate legal entity with a shared governance structure. Providers and suppliers participating in an ACO will continue to receive traditional Medicare fee-for-service payments under Medicare Parts A and B, but will also be eligible to receive a portion of the shared savings if they successfully satisfy quality performance standards and reduce health care costs. The ACO must agree to participate for a three year period.
The standards used to assess the quality of care provided by ACOs will be grouped into five domains: 1) patient/care giver experience; 2) care coordination; 3) patient safety; 4) preventive health; and 5) at-risk population/frail elderly health. CMS proposed that ACOs submit data on a total of 65 measures to calculate the ACO Quality Performance Standard, and anticipates refining and expanding the measures in the future. In the first year, an ACO would be required to fulfill the reporting obligation only as a condition for receiving the shared savings payment. However, beginning in the second program year, performance on the reported measures will be considered when determining whether an ACO is eligible to receive shared savings payments. ACOs will receive larger percentages of shared savings if they demonstrate that they are providing high quality care.
What You Need To Know
To qualify for a shared savings payment, an ACO must achieve a minimum savings. The benchmark used to assess savings will be based on the per capita Medicare Parts A and B expenditures for beneficiaries who would have been assigned to the ACO in any of the prior three most recent available years, adjusted for overall growth and beneficiary characteristics. The amount by which an ACO’s average per capita Medicare expenditures must be below the benchmark for a performance year will vary depending on whether the ACO is liable for sharing any losses and the number of beneficiaries assigned to the ACO. The lowest minimum savings rate proposed is 2 percent and the highest minimum savings rate proposed is 3.9 percent. This means that ACOs will not be eligible to share in the savings unless they reduce the per capita Medicare expenditures during the applicable contract year by more than the minimum savings rate percentage.
The proposed rule includes provisions related to: the eligibility and governance of ACOs, data sharing, assigning beneficiaries to ACOs, quality measures, performance scoring, public reporting responsibilities, the shared savings determination, risk-models and monitoring and terminating ACOs.
The unanswered question is how many potential ACO participants will want to participate in this Medicare Program? The Program is expected in the early years to attract the mature integrated health systems that have the capital, infrastructure and participants to easily qualify as ACOs. The ability of other potential participants to meet the rigorous participation requirements is unknown. Less evolved ACO models, for example, a next generation physician hospital organization or patient centered medical home, may be able to meet the ACO requirements, evolve over time, expand its participant provider/supplier pool and incorporate more sophisticated delivery arrangements to an expanded population.
This e-Alert contains a summary of the basic design elements of ACOs as set out in the proposed rule, including:
To read the entire text of the alert, click here. We will be providing additional analyses over the coming weeks that will flesh out the details of this very complex initiative.
Polsinelli Shughart Health Reform Team
Polsinelli Shughart's Health Care Practice group has formed an ACO team that has been engaged in the ACO discussion for some time. The team will be preparing a series of e-alerts focusing on the major provisions of the rule and their impact. Shortly, we will be announcing an ACO webinar series that targets the major issues in the proposed rule, including legal structure and models, payment models and treatment of savings, quality metrics and reporting and compliance/sanctions.
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For More Information
If you have questions about ACOs, please contact:
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