How Will the ACO Regulations Affect You?

How Will the ACO

Regulations Affect

You?

Partner, Healthcare & Healthcare IT Practices

Ward Bondurant

Partner, Healthcare, Insurance & Corporate Practices

Joe Holahan

What is an ACO?

• Means a legal entity that is recognized and authorized under applicable State law;

• Identified by a Taxpayer Identification Number (TIN);

• Comprised of an eligible group of ACO participants that work together to manage and coordinate care for Medicare FFS beneficiaries; and

• Have established a mechanism for shared governance that provides all ACO participants with an appropriate proportionate control over the

Statutory Basis

•

Shared Savings Program is part of the Patient Protection and

Affordable Care Act to be codified at 42 USC 1899.

Impact on Healthcare

•

Coordinates the delivery of care between providers.

•

Encourages investment in infrastructure (Healthcare IT).

•

Encourages the redesign of care processes to focus upon

Basic Requirements

1.

Accountable for the quality, cost, and the overall care of the

Medicare fee-for-service (FFS) beneficiaries assigned to it.

2.

Enter into an agreement with the Secretary to participate in

the program for not less than a 3-year period.

3.

Formal legal structure that would allow the organization to

receive and distribute payments for shared savings to

participating providers of services and suppliers.

4.

Include primary care professionals that are sufficient for the

number of Medicare FFS beneficiaries assigned to the

Basic Requirements

5.

Provide the Secretary with such information regarding ACO

professionals participating in the ACO as the Secretary

determines necessary to support the assignment of

Medicare fee-for-service beneficiaries to an ACO, the

implementation of quality and other reporting requirements,

and the determination of payments for shared savings.

6.

Maintain leadership and management structure that includes

clinical and administrative systems.

7.

Define processes to promote evidence-based medicine and

Basic Requirements

8.

Report on quality and cost measures, and coordinate care,

such as through the use of telehealth, remote patient

monitoring, and other such enabling technologies.

9.

Demonstrate to the Secretary that the ACO meets

Eligible Entities

•

ACO professionals in group practice arrangements.

•

Networks of individual practices of ACO professionals.

•

Partnerships or joint venture arrangements between

hospitals and ACO professionals.

•

Hospitals employing ACO professionals.

Eligible Entities

Limits and excludes some key areas of the healthcare

delivery system:

– FQHC

– RHC

– CAH

Legal Entity/Governance

•

Recognized under State Law as Legal Entity with a TIN.

•

Governing Body must have 75% representation from ACO

members.

•

Financial and clinical Integration.

•

A leadership and management structure that includes clinical

Assignment of Beneficiaries

•

Assigned based on “plurality” of primary care services with a PCP in

an ACO.

– Based on allowed charges, not a simple count of services.

•

Assigned retrospectively for calculating savings.

– CMS will provide list of beneficiaries.

Shared Savings

•

Meet all minimum quality performance standards.

•

Achieve spending less than benchmark.

Shared Savings

Two types:

– One-sided

• Savings only for 2 years.

• Capped at 7.5% of benchmark.

• Share 50% of savings over minimum up to cap.

• Weighted by quality score.

• Year 3 move to upside/downside model.

– Two-sided

• Savings or losses.

• Savings capped at 10% of benchmark.

• Share 60% of savings over minimum up to cap.

• Weighted by quality score.

Eligibility:

Required Processes

• The ACO application will require the applicant to describe its plans for: • Processes to promote evidence-based medicine

• “…the application of the best available evidence gained from the scientific method to clinical decision-making.”

• The establishment and implementation of evidence-based

guidelines, based on the best available evidence concerning the effectiveness of medical treatments, at the organizational or

institutional level; plus

Eligibility:

Required Processes

• Processes to promote patient engagement

• “…the active participation of patients and their families in the process of making medical decisions.”

• The opportunity for patients and families to assess prospective treatment approaches in the light of their own values and

convictions.

Eligibility:

Required Processes

• Processes to report on quality and cost measures

• Such as developing a population health data management capability, or implementing practice and physician level data

capabilities with point-of-service (POS) reminder systems to drive improvement in quality and cost outcomes.

Eligibility:

Required Processes

• Processes to promote coordination of care

• Strategies to promote, improve, and assess integration and consistency of care across primary care physicians, specialists, and acute and post-acute providers and suppliers.

• Includes methods to manage care throughout an episode of care and during its transitions (i.e. discharge from a hospital or transfer of care from a primary care physician to a specialist).

Eligibility Requirements:

Patient Centeredness Criteria

• An ACO must be able to show that it meets specified patient-centeredness criteria.

• “…care that incorporates the values (to the extent the informed, individual patient desires it) of transparency, individualization, recognition, respect, dignity, and choice in all matters, without

Eligibility Requirements:

Patient Centeredness Criteria

•

8 required criteria

1. Patient experience of care survey.

2. Patient involvement in governance of the ACO.

3. Evaluation of population health needs and consideration

of diversity in patient population.

4. Systems to identify high-risk individuals and processes

to develop individualized care plans for targeted patient

populations, including integration of community

resources.

Eligibility Requirements:

Patient Centeredness Criteria

•

8 required criteria (continued)

6. Processes for communicating clinical

knowledge/evidence-based medicine to patients.

7. Patient access and communication and a process in

place for patients to access their medical record.

8. Internal processes for measuring clinical or service

Eligibility Requirements:

Program Integrity Requirements

• ACO must include program integrity criteria to protect the Shared Savings Program (and other parts of Medicare or other Federal health care) from fraud and abuse.

• ACO must meet each of the following program integrity criteria: • A compliance plan, including:

• A designated compliance official (other than legal counsel).

• Mechanisms for identifying and addressing compliance problems. • A method for employees/contractors to report problems.

• Compliance training.

Eligibility Requirements:

Program Integrity Requirements

• Policies and procedures designed to monitor compliance with

program requirements, including requirements for certification of

information by an authorized representative of the ACO.

• Conflicts of interest policy that applies to members of the ACO’s

governing board.

• Screening of ACO applicants and exclusion of applicants that

have had program integrity problems.

Quality and Other Reporting

Requirements

• Three stated goals for improvement of the health care of Medicare beneficiaries and, by extension, of all Americans.

1. Better care for individuals;

2. Better health for populations; and 3. Lower growth in expenditures.

• “Better health care for individuals” defined as health care that is safe, effective, patient-centered, timely, efficient, and equitable.

Quality Performance Standards

• To prevent ACO participants from achieving savings by withholding necessary services, the ACO must meet minimum performance

standards based on specified quality measures in order to be eligible for any shared savings payment for a given year.

• For Year 1, an ACO is just required to report on all of the measures, and will receive the highest percentage of shared savings available to that ACO.

• For each subsequent year, the ACO’s actual performance score on the quality measures (expressed as a percentage of total points available) will determine the percentage of savings the ACO will

Quality Performance Standards

• The Proposed Regulations specify 65 measures (see Table 1 in the Regs) based on the aims of improved care and improved health. Each measure has NQF endorsement or is currently used in other CMS quality programs.

• Improved Care measures are organized in three domains:

• Patient/caregiver experience (7 measures, all based on survey results);

• Care coordination (16 measures, including percentage of ACO participants that meet HITECH meaningful use requirements);

• Patient safety (2 measures).

• Improved Health measures are organized in two domains: • Preventive health (9 measures) and

• At-risk populations/frail elderly (29 measures, including diabetes (10

Quality Performance Standards

[Excerpt from Table 1 of the Proposed Regulations]

Domain Measure Title & Description

CMS Program, NQF Measure Number, Measure Steward Method of Data Submission Measure Type

AIM: Better Care for Individuals

1

Patient/Care Giver Experience

Clinician/Group CAHPS:

Getting Timely Care, Appointments, and

Information NQF #5 Survey Patient Experience of Care 2 Patient/Care Giver Experience Clinician/Group CAHPS:

How Well Your Doctors Communicate NQF #5 Survey

Patient Experience of Care 3 Patient/Care Giver Experience Clinician/Group CAHPS:

Helpful, Courteous, Respectful Office Staff NQF #5 Survey

Quality Measures Data Collection

• Data collection and submission methods:

• Most performance measures can be derived from CMS data.

• Many of the measures are based on data similar to that collected for other purposes, such as the Physician Quality Reporting

System, EHR Incentive Program, etc.

• For quality data not captured in claims processing systems, CMS will make available a CMS-specified data collection tool (see

measures designated for Group Practice Reporting Option (GPRO) Data Collection Tool in Table 1).

Quality Performance Scoring

• Two options for measuring performance standards: • Option 1 – Performance Scoring

• Step One: Score each Measure (see Table 3)

• Step Two: Combine Measure scores within each Domain • Step Three: Calculate percentage per Domain (see Table 4) • Step Four: Combine Domain percentages into one percentage • Step Five: Apply percentage to applicable total potential

shared savings (50% for one-sided and 60% for two-sided) • Failure to reach the minimum level for a Domain would preclude

Quality Performance Scoring

No points <30 percentile FFS/MA Rate or <30 percent

1.10 point 30+ percentile FFS/MA Rate or 30+ percent

1.25 points 40+ percentile FFS/MA Rate or 40+ percent

1.4 points 50+ percentile FFS/MA Rate or 50+ percent

1.55 points 60+ percentile FFS/MA Rate or 60+ percent

1.7 points 70+ percentile FFS/MA Rate or 70+ percent

1.85 points 80+ percentile FFS/MA Rate or 80+ percent

2 points 90+ percentile FFS/MA Rate or 90+ percent

Quality Points ACO Performance Level

Quality Performance Scoring

Coronary Artery Disease Hypertension

Chronic Obstructive Pulmonary Disorder Frail Elderly Category 35-65 (31 measures) 26-34 (9 measures ) 24-25 (2 measures) 8-23 (16 measures) 1-7 (7 measures) Table 1 Measures (Total) 60% 50% 130 130 62 62 18 18 4 4 32 32 14 14 Two-Sided Model – Total Potential Points Per Domain One-Sided Model –

Total Potential Points Per Domain

Quality Threshold Option

• Option 2 – Quality Threshold

• Alternative calculation offered for comment.

• All-or-none savings sharing based on attaining minimum quality threshold.

• Minimum quality threshold would be 50% for each Domain (see Table 3).

Public Reporting

Information regarding the ACO that should be publicly reported:

– Name and location – Primary contact

– Organizational information including: • ACO participants;

• Identification of ACO participants in joint ventures between ACO professionals and hospitals; • Identification of the ACO participant representatives on its governing body; and

• Associated committees and committee leadership. – Shared savings information including:

• Shared savings performance payment received by ACOs or shared losses payable to CMS; and

• Total proportion of shared savings invested in infrastructure, redesigned care processes and other resources required to support the three-part aim goals, including the proportion

•

CMS suggests that ACOs do not assume insurance risk.

– Medicare “retains insurance risk and responsibility for paying claims for services rendered to Medicare beneficiaries….”

– “[T]he agreement to share risk against the benchmark would be solely between the Medicare program and the ACO.”

– Nothing in the proposed rule intended to cause states to bear costs resulting from Shared Savings Program.

•

But leaves the door open for state regulation.

– Each state “has its own insurance and risk oversight programs….” – “[S]ome states may regulate risk bearing entities, such as the ACOs

participating in the two-sided model….”

– “We do not believe that there is anything in this proposed rule that either explicitly or implicitly pre-empts any State law.”

Will States Regulate ACOs?

• ACOs do not fit definitions commonly found under state laws governing risk-bearing entities, such as HMOs and health service plans.

– No prepayment for health care services.

– No contractual relationship between beneficiaries and ACO. – No direct restrictions on beneficiaries.

• Nevertheless, ACOs have features that could prompt state regulation. – ACO bears financial risk.

– Participating providers are subject to downstream risk.

Important to Evaluate ACO on

State-by-State Basis

•

Evaluate laws and regulations relating to:

– Licensed risk-bearing entities

– Third-party administrators

– Utilization review agents

– Managed care generally

•

Keep a close eye on NAIC discussions and regulatory

• Captive can provide mechanism to ensure repayment of losses to Medicare.

• Participating providers may see value in captive program to cover professional liability risks.

– Professional liability exposure may increase for providers participating in ACO.

– Consistent approach to claims investigation and defense. – Take advantage of ACO data collection and governance. – Shared savings from improvements in patient safety.

• Captive can be used to cover liability risks of ACO, its governing body and management.

Antitrust Policy Statement

• ACO must determine its expected market share in each ACO participant’s primary service area (referred to as “PSA Shares”) for specific health care services, based on Medicare claims data. • If (a) the combined PSA Shares for two or more participants does not exceed 30 percent, and (b)

none of the ACO’s hospitals or ASCs are exclusive to that ACO, the ACO will qualify for the antitrust safety zone. The ACO will not be subject to antitrust challenge absent extraordinary circumstances. Special rules apply if ACO participants include a “dominant provider” or a certain number of rural hospitals or physicians.

• If the combined PSA Shares for any two or more participants in the ACO exceeds 50 percent, the ACO must apply for expedited (90 day) antitrust clearance prior to applying to CMS. Without such clearance, the ACO is not eligible for the Program.

• If an ACO has a PSA Share between 31 and 50 percent, that ACO has the option of requesting clearance from the antitrust agencies. An ACO that voluntarily seeks antitrust clearance runs the risk of being barred from the Program if the antitrust agencies deny the request.

AMGA Letter

(May 11

th

)

• American Medical Group Association concerns over the direction of the Proposed Rule:

• Overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive.

• In a survey of AMGA members, 93 percent said they would not enroll as an ACO under the current regulatory framework.

• Members’ concerns focused on issues such as the risk sharing requirement, static risk adjustment, retrospective attribution, quality measurement requirements, the Minimum Savings Rate requirements and others.

PGP Demonstration Group Letter

(May 12

th

)

Reservations about the economics and the complexity of the proposed regulations, including: • Downside risk during the initial 3-year term; downside risk is compounded by significant

investment cost on the part of the ACO.

• Savings are measured net of 2% threshold for the one-sided risk model; the Minimum Savings Rate (MSR) is set at high levels for ACOs with lower enrollment.

• Limits placed on accounting for beneficiary acuity level that is documented and appropriate will dilute true savings realized by the ACO, and is a disincentive for management of patients with complex care needs.

• A large number of quality measures, especially new quality metrics in several domains, that go into effect starting year one; on average, it costs about $30,000 just to program a single new quality

metric; the regulations have more than 60 new ones, which equates to nearly $2,000,000 for each organization.

• Retrospective attribution places limits on the ACO’s ability to bend the cost curve; it impedes optimal patient engagement, timely program planning and course correction, and compounds underlying issues of claims lag and financial settlement.

Innovation Center Release

(May 17

th

)

• Pioneer ACO Model:

• The Innovation Center is accepting applications for the “Pioneer ACO Model” which will provide a faster path for mature ACOs that have already begun coordinating care for patients.

• Estimated to save Medicare as much as $430 million over three years.

• Designed to work in coordination with private payers in order to achieve cost savings and improve quality across the ACO, improving health outcomes and reducing costs for employers and patients with private insurance.

• Advance Payment ACO Initiative:

• The Innovation Center is seeking public comments on whether it should offer an

Advance Payment Initiative that would allow certain ACOs access to a portion of their shared savings up front, helping providers make the infrastructure and staff

CMI

•

Creation of Centers for Medicare and Medicaid Innovation

(CMI).

•

The CMI will be the major focal point for the identification of

problem areas in health care delivery and identification and

testing of new models to improve program performance.

•

To design, implement and evaluate Medicare and Medicaid

demonstrations and pilot programs to test the feasibility, cost

effectiveness and quality outcomes of new health care

CMI Cont’d

•

To promote research and demonstration transparency by

disseminating findings to inform law makers and interested

parties about health care delivery issues, new innovative

concepts, and demonstrations and pilot programs.

•

Evaluative findings to develop new objectives for basic

research and new research demonstrations.

Other Models

Independence at Home Demonstration Program.

Hospital Readmissions Reduction Program.

Payment Models

•

Linking payment to quality.

•

Enhanced quality reporting for physicians and hospitals.

Governmental Incentives

•

Medicare and Medicaid EHR Programs

•

PQRI Incentives

Thank You for Joining Us Today

Please contact any of our presenters after the presentation if you have additional questions:

Michele Madison

Partner, Healthcare & Healthcare IT Practices 404.504.7621 / [email protected]

Ward Bondurant

Partner, Healthcare, Insurance & Corporate Practices 404.504.7606 / [email protected]

Joe Holahan

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