NATIONAL ASSOCIATION OF COMMUNITY HEALTH CENTERS Briefing Paper on the Proposed Medicare Shared Savings Program
The Centers for Medicare and Medicaid Services (CMS) recently issued a proposed rule to implement the Medicare Shared Savings Program (MSSP or Shared Savings Program), a key initiative mandated under Section 3022 of the Patient Protection and Affordable Care Act (the Act ) to transform the health care delivery system. While this summary provides an overview of the proposed rule, it does not attempt to cover all aspects of the MSSP. Instead, the focus of this briefing paper is on how CMS proposes to include FQHCs within the MSSP in order to provide a foundation for the preparation of formal comments to CMS by NACHC, PCAs and health centers.
I. Formation and Participation
Under the proposed Shared Savings Program, which must be established by January 1, 2012, groups of providers of services and suppliers would work together to manage and coordinate care for Medicare fee-for-service beneficiaries and have a mechanism for shared governance. Such a group of providers and suppliers, organized as a separate legal entity, would be known as an Accountable Care
Organization (ACO).
Notably, the proposed rule would create a distinction between those Medicare providers that would be able to participate in an ACO (referred to as “ACO participants”) and a subset of those ACO participants that would be eligible to form an ACO on their own. ACO participants would include:
1) ACO professionals in group practice arrangements 2) Networks of individual practices of ACO professionals
3) Partnerships or joint venture arrangements b/w hospitals and ACO professionals 4) Hospitals employing ACO professionals
5) CAHs that bill under Method II (as described in §413.70(b)(3)) 6) Other providers or suppliers (such as FQHCs)
Under the proposed rule, CMS would permit only the first five types of ACO participants listed above to be eligible to form an ACO independently.
ACO participants upon whom beneficiary assignment would be based (which CMS defines as primary care physicians with a designation of internal medicine, geriatric medicine, family practice, and general practice) would be required to participate exclusively with one ACO. In contrast, ACO participants upon which beneficiary assignment would not be based (such as acute care hospitals, physician specialists, and FQHCs) would not be restricted to participation in a single ACO.
Note: FQHCs would not be allowed to form their own ACOs independent from other eligible ACO participants. CMS considered allowing FQHCs to form their own ACOS but assert in the preamble to the proposed rule that the specific payment methodologies, claims billing systems, and data reporting requirements that apply to FQHCs would prevent CMS from determining beneficiary assignment and expenditures during the 3-year benchmark (discussed below).
II. Legal Entity and Governance
operates. While Medicare would continue to pay individual providers and suppliers for items and services using fee-for-service methodologies, the ACO, as a legal entity, would be identified by a separate TIN. To associate Medicare providers with a particular ACO, the ACO would report the Medicare enrolled TINs of its participants to CMS, along with a list of associated National Provider Identifiers (NPIs) .
An ACO would be required to have a “mechanism for shared governance.” The governing body (or other appropriate mechanism) would consist of ACO participants and Medicare beneficiaries. ACO
participants would be required to control at least 75% of the governing body. A legal entity in existence prior to the MSSP would not be required to form a separate governing body or create a new legal entity to become an ACO, but would have to meet the eligibility requirements described in the proposed rule, including those related to governance structure.
Each ACO participant would be required to choose a representative from within its organization to represent them on the governing body and each ACO participant would be required to have appropriate proportionate control over the ACO’s decision making process.
Note: If an FQHC were to agree to participate in multiple ACOs, then it would be required to serve on multiple ACO governing boards. To the extent that an FQHC served on multiple governing boards within the same geographic area, this might raise issues related to competition and conflicts of interest. This would also be an issue for hospitals and other specialists which are permitted to join multiple ACOs. III. Contractual Obligations
By participating in the Shared Savings Programs, ACOs would be required to agree to the following: To submit a timely application to CMS
To enter into a contract with CMS agreeing to a three-year agreement term and one-year performance periods
To maintain at least 5,000 beneficiaries
To have a sufficient number of ACO professionals for the number of Medicare fee-for-service beneficiaries assigned to the ACO
To notify its beneficiaries that it is participating in an ACO To submit its marketing materials to CMS for approval IV. Shared Savings Determination
Under the proposed rule, to qualify for shared savings, an ACO would be required to have total per capita costs for assigned beneficiaries in the performance year that fell below a certain benchmark and above a minimum savings rate. Additionally, the ACO would also be required to meet certain quality and performance standards.
Beneficiary Assignment
CMS proposes to assign beneficiaries to an ACO based on where they received the plurality of their primary care services from physicians who have a designation of internal medicine, geriatric medicine, family practice, and general practice. However, this definition of primary care services only would include services rendered by a physician, not primary care services rendered by a Nurse Practitioner (NP), Physician Assistant (PA), or Clinical Nurse Specialist (CNS).
Note: As a result of excluding primary care services rendered by NPs, PAs, and CNSs, CMS’ proposed approach to assignment would undercount the number of beneficiaries receiving primary care services at FQHCs.
That might not matter, however, given that CMS proposes to disregard FQHC claims data in the assignment process even if the patient were treated by a physician at the FQHC . As support for its proposed position, CMS indicated that it does not believe it possesses “the requisite data elements (service code, physician, physician specialty, and specific attribution of services to the rendering health care professionals) in the claims and payment systems” of FQHCs to determine beneficiary assignment. Note: Consequently, it appears that the only method for assigning FQHC patients to an ACO in which the FQHC participates would be based solely on data from other eligible ACO participants. Put another way, the proposed rule would appear to implement a program in which no patient of an FQHC could be assigned to an ACO unless he or she were also seen by a non-FQHC physician that also participates in an ACO.
Benchmarks
The benchmark for savings would be an estimate of what the total Medicare fee-for-service Parts A and B expenditures for ACO beneficiaries would otherwise have been in the absence of the ACO, even if all of those services would not have been provided by the providers participating in the ACO. An ACO would have to meet this benchmark to receive shared savings, otherwise it could be held liable for losses under the risk models described below.
In order to establish the benchmark, CMS proposes to compute per capita estimated Medicare expenditures for beneficiaries that would have been assigned to the ACO in each of the three most recent available years, adjusted for overall growth and beneficiary characteristics, including health status, and weighted so that the most recent year counts 60%, the year prior 30%, and the year prior to that 10%. This benchmark would be updated annually during the agreement period.
Data Sharing with ACOs
Prior to an ACO’s performance year, CMS would use the most recent 12 months of data for identifying beneficiaries that could potentially be assigned to the ACO. CMS proposes to share both aggregate and beneficiary identifiable data with the ACOs for purposes of population-based activities relating to improving health or reducing health care costs, case management, and care coordination. A beneficiary would be able to opt-out of having his or her claims data shared with the ACO.
Calculation of Savings
savings, the ACO would be required to exceed the MSR established for the size of the ACO, which under the proposed rule would in no case be less than 2%.
Quality Performance Standards
CMS proposes 65 quality reporting measures within five domains: Patient Experience of Care
Care Coordination Patient Safety Preventive Health
At-Risk Population/Frail Elderly Health
In order to meet the quality performance standards, ACOs would report how they had met applicable performance criteria (defined in the proposed rule) for each of the three years within the agreement period. Because the proposed rule would require at least 50 percent of an ACO's primary care
physicians to be meaningful EHR users (as defined by the HITECH Act), CMS anticipates that many of the
quality data measures would be reported using certified Electronic Health Records (EHR) software.
ACOs that did not meet the quality performance thresholds for all proposed measures would not be eligible for shared savings, regardless of how much per capita costs were reduced.
Risk Models
To determine what percentage an ACO would be entitled to recover in shared savings, the ACO would participate in one of two risk models: a one-sided model or a two-sided model. ACO would choose between the two for the initial three-year agreement period, but after that period all ACOs would be required to move to a two-sided model.
One-Sided Model
The proposed one-sided model would be available to ACOs with less experience and those that desire less risk. For the first two performance years, the one-sided model would provide shared savings only – there would be no risk of loss. In the third performance year, however, the ACO would both participate in shared savings and assume the risk of loss. In the one-sided model, the ACO would have a larger MSR and the ACO would receive a shared savings payment up to 50% if it meets all requirements.
Two-Sided Model
The proposed two-sided model would be available to more experienced ACOs that would be
comfortable with taking more risk. In the two-sided model, the ACO would share in savings and assume risk of loss for all three years of the agreement period. The two-sided model would have a smaller MSR (CMS has suggested 2%) and would receive up to 60% of savings if it met all requirements.
Increased Savings Incentives for FQHC and RHC Participation
Note: Although the potential to earn additional savings should incentivize the recruitment of FQHCs as ACO participants, it is not clear how beneficiaries receiving their primary care at FQHCs could be assigned to an ACO under CMS’ proposal to disregard FQHC claims data in the beneficiary assignment process. Even if assignment were possible, it is not clear, in the event an FQHC chooses to participate in multiple ACOs, which of the ACOs would be assigned the beneficiaries served by the FQHC.
V. Distribution of Savings and Repayment of Losses
Under the proposed rule, an ACO would be required to describe its method of distribution of savings in its application. Whether or not an FQHC would receive a portion of an ACO’s shared savings would depend on how the ACO’s governing body decided to split the savings. As such, a participating FQHC could receive a portion of savings if the governing body were to decide to include the FQHC in its savings distribution plan.
An ACO would decide how to fund repayment to CMS in the event of loss – recovering funds from participants, reinsurance, escrowing funds, obtaining surety bonds, or a line of credit – but CMS would be required approve the method. In addition, the ACO would be required to disclose on its application the percentage of shared losses that each ACO participant would be responsible for and the participants would be required to sign an agreement establishing this liability.
VI. Overlap with other CMS Shared Savings Initiatives
Under the proposed rule, providers would not be allowed to participate in an ACO under the Medicare Shared Savings Program if, at the same time, it were to participate in (1) the Independence at Home Medical Practice Demonstration program, (2) a medical home demonstrations with a shared savings element (currently, the only such Medicare demonstration that includes a shared savings component is the multi-payer advanced primary care demonstration), or (3) a demonstration administered by the Center for Medicare and Medicaid Innovation (CMMI) which has a shared savings component.
Note: Although the FQHC Advanced Primary Care Practice Demonstration is administered through the CMMI, it is not a shared savings program. Accordingly, our understanding, based on informal
discussions with CMS, is that an FQHC would be able to participate in both an ACO and in the Advanced Primary Care Practice Demonstration.
VI. Interaction with Fraud and Abuse, Antitrust, and Tax Laws
policy related to the MSSP; and the Internal Revenue Service (IRS) issued a notice requesting comments regarding participation by tax-exempt organizations in the MSSP.
Note: The proposed fraud and abuse waivers and antitrust enforcement policy appear to be limited to the Medicare Shared Savings program. Consequently, ACOs participating exclusively in Medicaid (or where FQHCs participate exclusively in Medicaid ACOs), would not be subject to the waivers, exceptions, safe harbors or protections otherwise available under the Medicare Shared Savings Program.
Accordingly, if FQHCs (as well as any Medicaid provider) were permitted to establish ACOs in their state, these protections would not appear to be available. As to whether the safe harbor for federally funded health centers might provide some protection to FQHCs would be something we would need to
determine on a case-by-case basis. Conclusion
Although the proposed rule is limited to the Medicare Shared Savings Program, the possibility that States might seek to apply these proposed rules to Medicaid ACOs (or CMS might apply them to States through the approval of Medicaid waiver applications) raises the stakes for FQHCs.
