HHS has released a 429-page proposed rule on Medicare accountable care organizations. Comments on the proposed rule will be accepted for 60 days. ACOs are slated to start in Jan. 2012.
Here are 10 key points in the proposal, gleaned from a conference call with federal officials, from others who received advance copies of the proposal and directly from parts of the proposal.
1. Projected savings. Net savings over the first three years are expected to be $510 million, or as high as $960 million, HHS and CMS officials said in a conference call.
2. Two payment tracks. In the initial stage of the program, the proposal allows ACOs to choose between two different tracks to get shared savings. In the first, "one-sided risk" model, an ACO that saves at least 2 percent of reimbursements would get 50 percent of the money above that threshold, but it would have no penalty if it spent more in the first and second year. A second, more risky model would give an ACO 60 percent of the money above the threshold but also penalize the ACO if it spent more.
In other words, all ACOs would become responsible for losses by the third year of the program, notes Chet Speed, vice president for public policy at the American Medical Group Association. He thinks that might be too early for new ACOs with little experience.
Only half of physician practices in the Physician Group Practice Demonstration, the model for the ACO program, received shared savings, Mr. Speed says. But in a question and answer session, CMS Administrator Don Berwick, MD, said the new program has different sharing rates than the demonstration had. He did not provide details, however.
3. No start-up funding. The proposal reportedly lacks any start-up funding for ACOs. ACO planners have stated that the shared savings should be an adequate incentive for providers to invest in an ACO, Mr. Speed says. However, he says the average the start-up cost for each participant in the Physician Group Practice Demonstration was in the seven figures.
4. Beneficiaries can limit data. Each provider in the ACO must inform beneficiaries that they are part of the ACO and that the ACO would like to be able to request claims data for them. Beneficiaries who object are given a form to opt out of the sharing information. Those who opt out can still get care from the physician or other providers.
This opt-out provision may cause problems for ACOs, says Bruce Merlin Fried, a senior member of SNR Denton's Health Care group. Not having information on certain beneficiaries could make it difficult to manage operations. "I would need to get more information about this," he says.
5. Reporting quality data. In the first year, an ACO would only have to report quality data. Then in years two and three their quality data will be scored and affect their shared savings payment. ACOs would report a total of 65 quality measures in five domains: patient/caregiver experience, care coordination, patient safety, preventive health, and at risk populations and frail elderly. The measures would be refined for the second year.
"This is a very significant amount of information," Mr. Fried observes. However, the proposed rule states, "We propose to align the quality measures specifications for the Shared Savings Program with the measures specifications used in our existing quality programs to the extent possible and appropriate for purposes of the Shared Savings Program."
6. A single hospital can become an ACO. A hospital would not have to bring together other providers to become an ACO, as long as the hospital has a sufficient number of primary care physicians, according to Mr. Fried.
7. Specialists cannot create an ACO. "Specialists can't lead in forming the ACO because they don't have primary care patients," Dr. Berwick said in a question and answer session with reporters. He said an ACO needs primary care physicians or other providers, such as mid-level practitioners.
8. Existing ACOs can join the program. An organization that is already an ACO does not have to create a new entity to qualify as a Medicare ACO. But the proposed rules also state the ACO governance structure has to include Medicare beneficiaries, Mr. Fried says.
9. Three levels of antitrust enforcement. The Federal Trade Commission and the Department of Justice have jointly issued a proposed statement of enforcement policy for ACOs, which mapped out the following three levels of enforcement.
10. Beneficiaries on ACO boards. The proposal would require having a Medicare beneficiary on the governing board of the ACO. "We are proposing that ACOs be required to demonstrate a partnership with Medicare FFS beneficiaries and meet patient centeredness criteria by including a Medicare beneficiary serviced by the ACO on the ACO governing body," the proposed rule stated.
Read the HHS proposed rule on ACOs (pdf).
Here are 10 key points in the proposal, gleaned from a conference call with federal officials, from others who received advance copies of the proposal and directly from parts of the proposal.
1. Projected savings. Net savings over the first three years are expected to be $510 million, or as high as $960 million, HHS and CMS officials said in a conference call.
2. Two payment tracks. In the initial stage of the program, the proposal allows ACOs to choose between two different tracks to get shared savings. In the first, "one-sided risk" model, an ACO that saves at least 2 percent of reimbursements would get 50 percent of the money above that threshold, but it would have no penalty if it spent more in the first and second year. A second, more risky model would give an ACO 60 percent of the money above the threshold but also penalize the ACO if it spent more.
In other words, all ACOs would become responsible for losses by the third year of the program, notes Chet Speed, vice president for public policy at the American Medical Group Association. He thinks that might be too early for new ACOs with little experience.
Only half of physician practices in the Physician Group Practice Demonstration, the model for the ACO program, received shared savings, Mr. Speed says. But in a question and answer session, CMS Administrator Don Berwick, MD, said the new program has different sharing rates than the demonstration had. He did not provide details, however.
3. No start-up funding. The proposal reportedly lacks any start-up funding for ACOs. ACO planners have stated that the shared savings should be an adequate incentive for providers to invest in an ACO, Mr. Speed says. However, he says the average the start-up cost for each participant in the Physician Group Practice Demonstration was in the seven figures.
4. Beneficiaries can limit data. Each provider in the ACO must inform beneficiaries that they are part of the ACO and that the ACO would like to be able to request claims data for them. Beneficiaries who object are given a form to opt out of the sharing information. Those who opt out can still get care from the physician or other providers.
This opt-out provision may cause problems for ACOs, says Bruce Merlin Fried, a senior member of SNR Denton's Health Care group. Not having information on certain beneficiaries could make it difficult to manage operations. "I would need to get more information about this," he says.
5. Reporting quality data. In the first year, an ACO would only have to report quality data. Then in years two and three their quality data will be scored and affect their shared savings payment. ACOs would report a total of 65 quality measures in five domains: patient/caregiver experience, care coordination, patient safety, preventive health, and at risk populations and frail elderly. The measures would be refined for the second year.
"This is a very significant amount of information," Mr. Fried observes. However, the proposed rule states, "We propose to align the quality measures specifications for the Shared Savings Program with the measures specifications used in our existing quality programs to the extent possible and appropriate for purposes of the Shared Savings Program."
6. A single hospital can become an ACO. A hospital would not have to bring together other providers to become an ACO, as long as the hospital has a sufficient number of primary care physicians, according to Mr. Fried.
7. Specialists cannot create an ACO. "Specialists can't lead in forming the ACO because they don't have primary care patients," Dr. Berwick said in a question and answer session with reporters. He said an ACO needs primary care physicians or other providers, such as mid-level practitioners.
8. Existing ACOs can join the program. An organization that is already an ACO does not have to create a new entity to qualify as a Medicare ACO. But the proposed rules also state the ACO governance structure has to include Medicare beneficiaries, Mr. Fried says.
9. Three levels of antitrust enforcement. The Federal Trade Commission and the Department of Justice have jointly issued a proposed statement of enforcement policy for ACOs, which mapped out the following three levels of enforcement.
- Antitrust safety zone. Separate hospitals or other independent providers creating an ACO would be in an "antitrust safety zone," free from antitrust concerns as long as they represent 30 percent or less of the market, a little bit broader than the current level, Mr. Fried says. They would be under no obligation to contact the enforcement agencies.
- Antitrust middle zone. If providers in the ACO represent 30-50 percent of the market, they would be free from prosecution as long as they engage in specified pro-competitive behavior. "An ACO in this category that does not impede the functioning of a competitive market and that engages in pro-competitive activities will not raise competitive concerns and may proceed without agency scrutiny," the proposal stated. It listed five types of conduct that ACOs in this category would have to avoid. These five types of conduct include:
"1. Preventing or discouraging commercial payers from directing or incentivizing patients to choose certain providers, including providers that do not participate in the ACO, through 'anti-steering,' 'guaranteed inclusion,' 'product participation,' 'price parity,' or similar contractual clauses or provisions;
2. Tying sales (either explicitly or implicitly through pricing policies) of the ACO’s services to the commercial payer’s purchase of other services from providers outside the ACO (and vice versa), including providers affiliated with an ACO participant (e.g., an ACO may not require a purchaser to contract with all the hospitals in the same network as the hospital that belongs to the ACO);
3. With an exception for primary care physicians, contracting with other ACO physician specialists, hospitals, ASCs, or other providers on an exclusive basis, thus preventing or discouraging them from contracting outside the ACO, either individually or through other ACOs or provider networks;
4. Restricting a commercial payer’s ability to make available to its health plan enrollees cost, quality, efficiency, and performance information to aid enrollees in evaluating and selecting providers in the health plan, if that information is similar to the cost, quality, efficiency, and performance measures used in the Shared Savings Program:
5. Sharing among the ACO’s provider participants competitively sensitive pricing or other data that they could use to set prices or other terms for services they provide outside the ACO."
- Automatic antitrust review. If providers in the ACO represent more than 50 percent of the market, they are subject to automatic review by the Department of Justice and the FTC. They will receive a 90-day expedited review. If either agency raises a concern, they could become part of the ACO program.
10. Beneficiaries on ACO boards. The proposal would require having a Medicare beneficiary on the governing board of the ACO. "We are proposing that ACOs be required to demonstrate a partnership with Medicare FFS beneficiaries and meet patient centeredness criteria by including a Medicare beneficiary serviced by the ACO on the ACO governing body," the proposed rule stated.
Read the HHS proposed rule on ACOs (pdf).