KEY CONSIDERATIONS OF CMS’ 2014 PROPOSED
MEDICARE SHARED SAVINGS RULE
Bernie Duco, Of Counsel, Norton Rose Fulbright
Christopher Kanagawa, Senior Counsel, Norton Rose Fulbright
Speaker
Bernie DucoOf Counsel, Norton Rose Fulbright
Bernie Duco joined Norton Rose Fulbright's healthcare team in 2014 after serving as Chief Legal Officer with the Memorial Hermann Health System. Bernie led the development of Memorial Hermann's Medicare certified Accountable Care Organization and was the lead legal advisor for MHMD – Memorial Hermann's clinically integrated physician group. Prior to joining Memorial Hermann, Bernie served as Senior Vice President and General Counsel for Mercy Health System in St. Louis. Having served for over 20 years as general counsel for large non-profit health systems, Bernie has broad corporate
governance, transaction, and litigation management experience. Bernie received his JD from the University of Houston Law Center and his BA from Rice
University. He is licensed to practice in Texas and Missouri.
Speaker
Chris KanagawaSenior Counsel, Norton Rose Fulbright
Christopher is a Senior Counsel whose practice involves health care transactional and compliance matters. His health care legal experience includes:
– Counseling hospitals, physician groups and other health care companies in business and
regulatory matters, including fraud and abuse compliance. Specific areas of focus include the development of Clinically Integrated Physician Networks and Accountable Care Organizations (ACOs) and participation in the Medicare Shared Savings Program (MSSP).
– Advising health care providers on compliance issues, including Stark voluntary
self-disclosures and health care regulatory compliance matters.
– Structuring business transactions among health care providers and handling mergers
and acquisitions of health care enterprises to address the changing business and regulatory environment in health care.
• Christopher handles operating issues affecting both for-profit and tax-exempt health care
Continuing Education Information
We have applied for Minimum Continuing Legal Education (MCLE) with the State Bar of California, Texas and Virginia in the amount of 1.0 hour. We have also applied for 1.0 hour of New York
non-transitional MCLE credit, which is appropriate for experienced lawyers only. Newly admitted lawyers will not receive New York MCLE credit.
Norton Rose Fulbright will supply a certificate of attendance to all participants that:
• Participate in the web seminar by phone and via the web
• Complete our online evaluation that we will send to you by email within a day after the event has taken place
Administrative information
• Today’s program will be conducted in a listen-only mode. To ask an online question at any time throughout the program, click on the question mark icon located on the tool bar in the bottom right side of your screen. Time permitting, we will answer your question during the session.
• Everything we say today is opinion. We are not dispensing legal advice, and listening does not establish an attorney-client
Background of Proposed MSSP Rule
• December 8, 2014 – CMS issued a proposed rule (“Proposed Rule”) that when adopted will update and significantly change
many aspects of the Medicare Shared Savings Program (“MSSP”)
• In the Proposed Rule, CMS has offered alternative approaches to addressing a number of issues and encourages comments
• CMS expects to issue a final rule in 2015, which would apply for the performance year beginning January 1, 2016 unless otherwise noted
• MSSP is a key component to the Medicare delivery system reform initiatives included in the Affordable Care Act aimed at: (1) better care for individuals, (2) better health for populations, and (3) lower growth in Medicare Parts A and B expenditures
• Under the Nov. 2011 final MSSP rule, CMS permits ACOs to participate in either:
–Track 1 – ACOs qualify to share in savings but are not responsible for losses
– Track 2 – ACOs qualify to share in savings with an increased sharing rate, but also must take on risk for sharing in losses
• In connection with the Nov. 2011 final MSSP rule, other agencies issued favorable guidance regarding ACO activities
–CMS and OIG jointly issued an interim final rule granting broad waivers of key Federal health care fraud and abuse laws (e.g., Stark, Federal Anti-Kickback Statute, etc.) for certain types of ACO-related arrangements and Medicare fee-for-service beneficiary incentives
Current MSSP Landscape
8
• Currently there are over 400 ACOs participating in the MSSP:
–27 ACOs accepted for performance period April 1, 2012 - Dec. 31, 2015 (initial performance year 21 months)
– 87 ACOs accepted for performance period July 1, 2012 - Dec. 31, 2015 (initial performance year of 18 months)
– 106 ACOs accepted for performance period January 1, 2013 - Dec. 31, 2015
– 123 ACOs accepted for performance period January 1, 2014 - Dec. 31, 2016
– 89 ACOs accepted for performance period January 1, 2015 - Dec. 31, 2017
• Under the current MSSP regulations, over 100 ACOs participating in Track 1 (shared savings only) would be required to transition to Track 2 (shared savings/losses) on Dec. 31, 2015 to continue
Major Themes in the Proposed Rule
• CMS recognizes the value of continuing the MSSP and that changes are required to address fundamental challenges:
– CMS estimates that, without significant changes to MSSP, a significant percentage (75%) of ACOs will drop out
– A significant number of current ACOs participating in the MSSP are small (under 10,000 attributed beneficiaries) or are comprised of rural providers)
• CMS has requested comments about many aspects of the Proposed Rule
• CMS encourages ACOs to adopt a two-sided performance-based risk arrangement but recognizes that many ACOs are not ready to make the transition
• CMS indicates a willingness to consider providing greater flexibility in care processes and more clinical data about Medicare
Overview of CMS’ 2014 Proposed Rule
• The Proposed Rule is designed to codify existing guidance,
reduce administrative burden and improve program function and transparency in various areas, including:
– Data sharing
– ACO participant agreement requirements (See Appendix A for requirements and considerations)
– MSSP application process
– Review of MSSP applications
• CMS also seeks comment on a number of options it is considering in order to encourage ACOs to take on two-sided
performance-based risk
Summary of Proposed Modifications
1.
Clarify existing and establish new definitions for various
terms, including “ACO participant,” “ACO
provider/supplier,” and requirements for ACO participant
agreements
2.
Add a process for ACOs to renew MSSP participation
agreement for an additional agreement period
Summary of Proposed Modifications (con’t)
12
4. Expand the kinds of beneficiary-identifiable data that would be provided to ACOs in various reports under the MSSP as well as simplify the claims data sharing opt-out process to improve the timeliness of access to claims data
5. Add or change policies to encourage greater ACO participation in risk-based models by:
– Offering ACOs the opportunity to continue participating under a one-sided participation agreement (similar to Track 1) after their first 3-year
agreement
– Reducing risk under Track 2
Key Areas Where CMS Is Seeking Comments
•
CMS is seeking comment on a number of issues that could
have significant impact on existing ACOs and health care
providers contemplating forming and/or participating in an
ACO network, including:
– The options proposed by CMS to encourage ACOs to take on
two-sided performance-based risk
–Whether Medicare beneficiaries should be assigned prospectively to
ACOs that accept risk (i.e., Track 2 and/or Track 3) so they will know in advance those beneficiaries for which they would be responsible
–Issues related to resetting an ACO’s benchmark in a subsequent
performance year
–Use of statutory waiver authority to improve participation in two-sided
risk models
Commenting on Proposed Rule
• Must be received by CMS no later than 5 p.m. on February 6, 2015
• Comments should refer to file code CMS-1461-P
1. Electronically - Submit at http://www.regulations.gov and follow the “Submit a comment” instructions
2. Regular Mail - Mail written comments to:
Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-1461-P, P.O. Box 8013 Baltimore, MD 21244-8013
3. By express or overnight mail - Send written comments to:
Centers for Medicare & Medicaid Services Department of Health and Human Services Attention: CMS-1461-P, Mail Stop C4-26-05 7500 Security Boulevard
Baltimore, MD 21244-1850
4. By hand or courier - See instructions in Proposed Rule (79 Fed. Reg. 79759
(Dec. 8, 2014).
Key Areas Involving “Clarifications”
•
Some of CMS’ proposed “clarifications” could
significantly impact ACOs and their ACO
participants – for example:
–
When an individual provider is deemed an “ACO
Provider/Supplier” (i.e., after being approved by
CMS)
–
Certain aspects of ACO legal structure and
governance
–
Fiduciary Duty of an ACO’s governing body
Legal Structure and Governance
•
ACO governing body must satisfy three criteria —
1.
Must be the same as the governing body of the legal
entity that is the ACO
2.
For an ACO with multiple ACO participants, the
governing body must be separate and unique to the
ACO and must not be the same as the governing body
of any ACO participant
3.
Must satisfy all other requirements set forth in 42 CFR
§425.106 (e.g., at least one Medicare beneficiary, at
least 75% control of the ACO’s governing body must be
held by ACO participants, etc.), including fiduciary duty
requirement
Legal Structure and Governance (con’t)
•
CMS intends to prohibit delegation of ACO final
decision-making authority to a committee of the
governing body or reservation of such authority to
ACO’s parent company
– CMS would permit limited delegation or reservation of authority, but
“ultimate authority to execute the functions of an ACO” must be retained by ACO’s governing body
– ACO functions include
- establishing processes to promote ACO objectives as set out in 42 C.F.R. § 425.112
- holding ACO management and leadership accountable
- appointment and removal of ACO governing board members, leadership, and management
Legal Structure and Governance (con’t)
• Implications/Considerations for ACO Member/Owner Reserved Powers
• Powers of ACO member(s)/owner(s)
– No unilateral reserved powers for the ACO member/owner?
– Does approval of ACO action by ACO’s parent company abrogate retention of “ultimate authority” in ACO’s governing body?
– ACO’s often look to their parent company for capital. The parent will be reluctant to capitalize an ACO if it cannot maintain sufficient oversight of the ACO’s operations
– Limits on rights of sole member/owner on the appointment/removal of a member of ACO’s governing body or key ACO leadership?
– Do your ACO’s governance documents (e.g., Operating Agreement, etc.) comport with CMS’ view?
ACO Board Members’ Fiduciary Duty
• The fiduciary duty owed to an ACO by its governing body members includes the duty of loyalty
• Governing body members must act only in the best interests of the ACO and not another individual or entity, including the individual interests of ACO participants, ACO providers/suppliers, or other individuals or entities
• In reality ACO’s governing body members will often have conflicts as a result of the relationship between the ACO and its ACO
Health Information Technology and Data Sharing
•
CMS proposes adding new ACO eligibility requirements and
will require an ACO in its MSSP application:
– To describe how it will encourage and promote the use of electronic health records, other health IT tools (e.g., population health management, etc.), telehealth services, etc.
– Define and submit major milestones or performance targets it will use in each performance year to assess the progress
• CMS also recognizes that increased data access would provide ACOs with a better picture about the care their assigned
beneficiaries receive, both within and outside the ACO, and proposes:
– Expanding Universe of Beneficiaries
– Increasing Frequency When Data is Provided
– Increasing Data Elements
Allocation of Shared Savings/Risk – CMS Objectives
• CMS notes inherent conflict in MSSP in that ACO participants
continue to receive Medicare fee-for-service payments under parts A and B while ACO is eligible to shared savings
• CMS wants to encourage growth in MSSP participation
Allocation of Shared Savings/Risk – Proposed Changes
22
• Extend Track 1 (shared savings/no risk) to second term, but reduce savings potential (40% rather than 50%)
• Modify Track 2 to make it more desirable
• Create a Track 3 for those ACOs ready to assume risk and
provide higher potential award (75% of savings potential along with increased risk) and possibly greater operational flexibility
• CMS has made several proposals regarding shared savings and risk issues and is actively soliciting comments
• CMS is proposing additions to or changes in policy that are intended to better encourage ACO participation in risk-based models by:
– Easing the transition from Track 1 to Track 2
– Reducing risk under Track 2
Allocation of Shared Savings and Risk – Track 3
• CMS is proposing to establish an additional risk-based option (Track 3) that offers:
– a higher maximum shared savings percentage (75%)
– higher performance payment limit (20%) than is available under Track 2 (60% and 15% respectively)
– a fixed Minimum Savings Rate (MSR) and Minimum Loss Rate (MLR) of 2%, and a cap on the amount of losses for which an ACO is liable that is fixed at 15% of its updated benchmark in each year
• CMS also considering proposal to prospectively assign Medicare beneficiaries so an ACO would know in advance those
Proposed Changes to Beneficiary Assignment
•
CMS proposes to update the Medicare beneficiary
assignment algorithm by:
– updating the CPT codes that would be considered to be primary care services as well as changing the treatment of certain physician specialties in the assignment process*
– including the claims for primary care services furnished by physician assistants (PAs), nurse practitioners (NPs), and clinical nurse specialists (CNSs) in Step 1 of the
assignment algorithm
– clarifying how primary care services furnished in federally qualified health centers
(FQHCs), rural health clinics (RHCs), and electing teaching amendment (ETA) hospitals will be considered in the assignment process
•
Considerations/Implications
– “Exclusivity” with respect to specialist physicians/groups who would be excluded from Medicare beneficiary assignment process
– Does this comport with existing agreements with such physicians/groups?
•
CMS Seeking Comments
24
Waiver of Medicare Payment Requirements
• CMS believes it is “reasonable and necessary” to provide for
additional program flexibility to increase the willingness of ACOs to participate in the MSSP under two-sided performance-based risk arrangements to increase quality and decease cost growth
• Proposed Waivers
– Waiver of SNF 3-Day Rule
– Billing and payment for telehealth services
– “Homebound” requirement under the home health benefit
• CMS is open to considering other payment requirement waivers
• CMS is especially interested in comments about how such waivers:
– would encourage ACOs to accept performance-based risk arrangements; and
Waivers for referrals to post-acute care settings
26
•
CMS is considering whether to waive the
longstanding prohibition that a hospital “not specify
or otherwise limit the qualified provider which may
provide post-hospital home services”
–CMS anticipates such waiver would be very narrow
–Would likely be limited to ACOs that accept risk
–May even limit to Track 3 (where beneficiaries are
prospectively assigned)
–Anticipate requiring ACO governing body to make a bona
fide determination to use and comply with all waiver
Benchmark Methodology
•
CMS seeking comments on benchmarking methodology
•
CMS acknowledges that the current benchmark
methodology in many cases discourages continued
participation in the MSSP
– Superior past performance makes achieving savings more difficult in
the future
•
CMS has proposed a number of different approaches and is
requesting comments on them
– ACO benchmarks set by regional (rather than national or individual)
performance or that reflect an ACO’s performance against the practice performance of the ACO participants’ peers
– CMS recognizes that changing the benchmark methodology is
Conclusions
•
CMS values the MSSP
•
CMS realizes that there must be significant changes in the
current MSSP if it is to grow
•
CMS is open to comments and recommendations about
improving the MSSP
•
Those ACOs with the capability to manage performance risk
will have an opportunity to do so in an environment that:
– provides more upside shared savings potential (75%) and more
downside risk and
– fewer restrictions on care processes
•
Those ACOs that are building capability will be able to stay
in the no-risk Track 1 (but with shared savings potential)
Appendix A – ACO Participant Agreement Requirements
• CMS seeks to codify the guidance it has issued since 2012 regarding requirements for ACO Participant Agreements
• Must only have ACO and ACO participant as parties (and signed by authorized individuals of each) and must:
– Expressly require the ACO participant to agree to participate in the MSSP and to comply with MSSP requirements and all other applicable laws and regulations
– Set forth the ACO participant’s rights and obligations in, and representation by, the ACO and how participation in the MSSP affects the ability of the ACO participant and its ACO providers/suppliers to participate in other Medicare demonstration projects or programs that involve shared savings
– Must describe how the opportunity to receive shared savings or other financial arrangements will encourage the ACO participant to adhere to the quality assurance and improvement program and evidence-based medicine guidelines established by the ACO
– Require the ACO participant to update enrollment information with its Medicare contractor using the Provider Enrollment, Chain, and Ownership System (“PECOS”), including adding and deleting the ACO professionals billing through the TIN of the ACO participant, on a timely basis
– Require ACO participants to notify the AO within 30 days after any addition or deletion of an ACO provider/supplier
– Permit the ACO to take remedial action against ACO providers/suppliers (including imposition of a corrective action plan, denial of incentive payments and termination of the ACO participant agreement) to address noncompliance with the requirements of the MSSP and other program integrity issues identified by CMS
– Require completion of a close-out process upon the termination or expiration of the ACO’s participation agreement that requires the ACO participant to furnish data necessary to complete the annual assessment of the ACO’s quality of care and addresses other relevant matters
Appendix A – ACO Participant Agreement Requirements
• Implications/Considerations
– ACO has ultimate responsibility for ensuring that all of its ACO providers/suppliers have agreed to participate in the MSSP and comply with MSSP requirements
– To meet this requirement, ACO may have direct contracts with ACO provider/suppliers (but
still has to have direct agreement with the ACO participant in place)
– Each ACO provider/supplier billing through the TIN of an ACO Participant must agree to
participate in the MSSP and to comply with the requirements of the MSSP and all other applicable laws and regulations
– Every member of an ACO participant (at least those billing through the TIN) must be a
provider/supplier and agree to be in the ACO
–If the member provider/supplier of an ACO participant becomes
ineligible to participate in the ACO, then the ACO participant must
remove the member or at least prevent the member from billing through the TIN or the ACO participant
–Should be carefully considered when ACO participants undertake
mergers or other business combinations
–Can require an undesired removal of a physician from his or her
practice group
Continuing education information
• If you are requesting CLE credit for this presentation, please complete the evaluation that you will receive from Norton Rose Fulbright.
• If you are viewing a recording of this web seminar, most state bar organizations will only allow you to claim self-study CLE. Please refer to your state’s CLE rules. If you have any questions
regarding CLE approval of this course, please contact your bar administrator.
• Please direct any questions regarding the administration of this presentation to Cristina De Los Santos at
Disclaimer
Norton Rose Fulbright LLP, Norton Rose Fulbright Australia, Norton Rose Fulbright Canada LLP, Norton Rose Fulbright South Africa (incorporated as Deneys Reitz Inc) and Fulbright & Jaworski LLP, each of which is a separate legal entity, are members (‘the Norton Rose Fulbright members’) of Norton Rose Fulbright Verein, a Swiss Verein. Norton Rose Fulbright Verein helps coordinate the activities of the Norton Rose Fulbright members but does not itself provide legal services to clients.
