Accountable Care Organizations Under Medicare Shared Savings Program PROPOSED RULE

Accountable Care Organizations Under Medicare Shared Savings Program PROPOSED RULE

The information in this document summarizes a proposed rule issued by the Centers for Medicare and Medicaid id Services. It has been released for public comment and response and therefore does not have the force of law. Moreover, it is likely l to change in part when a final rule is issued. This document is presented for informational purposes only and is not intended d to provide consulting services or legal advice. Laws, regulations, and policies concerning these matters are complex and developing. Please consult with your counsel or consultant for any specific guidance or advice concerning ACOs. For specific details regarding ACOs please see the CMS website at: http://www.cms.gov/sharedsavingsprogram/ 2

Discussion Topics 1 2 3 Background ACO Structure Quality Performance 4 Risk Sharing Models 5 6 Additional Considerations Summary 3

Background Healthcare reform legislation requires that the Secretary of Health and Human Services establish a Medicare Shared Savings Program by January 1, 2012 On April 7th, CMS published a proposed p rule for a Medicare Shared Savings Program via an Accountable Care Organization (ACO) model CMS will accept public comments through June 6th Some standards/requirements may change when a final rule is issued FTC, OIG and IRS released other documents to support implementation of the program 1 Patient Protection and Affordable Care Act, Pub. L. No. 111-148 1 3022 (2010) [ACA]. 4

Background ACOs are one of the first delivery-reform initiatives to be implemented under the Affordable Care Act (ACA). ACOs are intended to provide: better care for individuals, better health for populations, and slower growth in costs through improvements in care. Each ACO will be responsible for the care of a defined population of Medicare beneficiaries assigned to it based on their use of primary care services. If an ACO succeeds in both delivering high-quality care and reducing the cost of that care, it will share in the Medicare savings it achieves. http://healthpolicyandreform.nejm.org/?p=14106&query=of 5

What is an ACO? The proposed rule says an ACO is: A legal entity that is recognized and authorized under applicable state law, as identified by a Taxpayer Identification Number (TIN), and 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 ACO s decision-making gprocess In other words: A group of providers and suppliers of services (e.g., hospitals, physicians, and others involved in patient care) that will work together to coordinate care for the patients they serve in Original Medicare. CMS, Medicare Program; Medicare Shared Savings Program: Accountable Care Organizations, 76 Fed. Reg. 19,528, (April 7, 2011) [ACO Proposed Rule], 42 C.F.R. 425.4. 6

Overview Facts An Accountable Care Organization (ACO) is a type of Medicare shared savings program for Part A & B services Provider participation in an ACO is voluntary; patients may elect to use providers outside the ACO ACOs must: have at least 5,000 assigned Medicare beneficiaries participate in the program for a period of 3 years (subject to early termination provisions) have primary care physicians meet quality performance targets to qualify for shared savings select one of two models for risk sharing Application process will be known after the final rule is published Medicare providers that participate in an ACO will continue to be paid fee-for-service under the payment system for which they are eligible Any shared savings will be distributed to its participants according to their contractual arrangement with the ACO 7

ACO STRUCTURE 8

Who can form an ACO? Under the Affordable Care Act, the following participants may form an ACO: ACO professionals (e.g., physicians, physician assistants, nurse practitioners) 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 Other groups of providers and suppliers as the Secretary deems appropriate ACA 3022 (2010). 9

ACO Governance CMS has proposed: that ACO participants control at least 75% of the governing body if an ACO has multiple participants, each should have a proportionate share of control inclusion of a beneficiary served by the ACO who meets certain conflict of interest requirements Governing Body 25% ACO Participants or their Representatives 75% Other, including Medicare Beneficiary ACO Proposed Rule, Eligibility and Governance, 42 C.F.R. 425.5(d)(8); 425.5(d)(8)(ii). 10

ACO Management Governing Body Medical Director Clinical management Full-time Senior-level Board-certified physician Licensed in state of ACO Physically present Administrator Operations management Executive, officer, general partner or manager Governing body may appoint/remove Quality Assurance and Process Improvement Quality management Physician-directed Internal performance standards d Hold providers/suppliers accountable Identify/correct poor compliance Promote continuous quality improvement Data collection and evaluation infrastructure ACO Proposed Rule, Eligibility and Governance, 42 C.F.R. 425.5(d)(9). 11

Primary and Specialty Care ACOs are required by statute to have a sufficient number of primary care providers to care for the beneficiaries assigned to the ACO Primary care providers may only join one ACO There is no parallel requirement for specialty providers; specialty providers may join and participate in more than one ACO Primary care and specialty physicians and hospitals may participate in shared savings according to the agreements they have with the ACO Primary Care Physicians Under ACOs Internal Family Medicine Practice General Practice Geriatric Medicine ACA, 3022(b)(2); ACO Proposed Rule, Definitions, 42 C.F.R. 425.4. 12

Beneficiary Assignment CMS is proposing that patients be retrospectively assigned to ACOs based on: Medicare primary care service utilization Care previously provided by a PCP who is an ACO provider during the year for which savings are to be calculated Where the plurality of primary care was received Patient ACO ACO Proposed Rule, Assignment of Medicare fee-for-servicefor beneficiaries to ACOs, 42 C.F.R. 425.6. 13

Beneficiary Notification Proposed rule would require ACO participants to notify Medicare beneficiaries about their ACO participation By posting signs in each of their facilities By providing a written notification to beneficiaries CMS plans to instruct ACOs to supply ppy a form allowing beneficiaries to opt-out of having their data shared CMS intends to develop a communication plan to directly provide Medicare beneficiaries with general information about the Shared Savings Plan CMS has specifically solicited comments regarding notification to Medicare beneficiaries ACO Proposed Rule, Assignment of Medicare fee-for-service beneficiaries to ACOs, 42 CFR 425.6(c); ACO Proposed Rule, Beneficiary Opportunity To Opt-Out of Claims Data Sharing, at 19,559-60. 14

Sample ACO Model Contract CMS Shared savings payment Medicare FFS payment ACO Primary Care Physicians * Hospital Specialists Other Providers Providers of Medicare Parts A & B services are paid FFS under the payment system for which they are eligible (IPPS, OPPS, PFS) * Physicians i with a specialty designation of internal medicine, i general practice, family practice, or geriatric i medicine i [ACO Proposed Rule, 42 C.F.R. 425.4]. 15

The ACO Agreement Submit application to CMS after final rule is published and before an established deadline CMS reviews application and determines whether to accept or deny If approved, the ACO must enter into a 3-year agreement with CMS ACO Proposed Rule, The 3-year agreement with CMS, 42 C.F.R. 425.18. 16

QUALITY PERFORMANCE 17

ACO Quality 5 Measure Domains 65 Patient/ caregiver experience Care coordination Patient safety Preventive health At risk population/ frail elderly health ACO Proposed Rule, Calculating the ACO quality performance score and determining shared savings eligibility, 42 C.F.R. 425.10(a). ACO Proposed Rule, Quality and other reporting requirements, at 19,571-91. 18

Examples of ACO Quality Performance Measures Measure # Domain Title/Description Measure Type 1 Patient/caregiver t/ i Experience Clinician/Group CAHPS: How well do your doctors communicate? Patient t Experience of Care 8 Care Coordination/Transitions Risk-standardized, all condition readmission: rate of readmission within 30 days of hospital discharge Outcome 24 Patient Safety Healthcare acquired conditions Outcome 30 Preventive Health 40 At Risk Population Cholesterol management for patients with cardiac conditions Diabetes mellitus: hemoglobin A1c poor control (>9%): percentage of patients aged 18-75 with diabetes mellitus who had most recent hemoglobin A1c > 9% Process & Outcome Outcome ACO Proposed Rule, Quality and other reporting requirements, at 19,571-91. 19

Quality Performance Standard Data Collection Methods Claims Surveys ACO Group Practice Reporting Option tool Measure scoring Measure scoring Reporting year 1 (2012) year 2 year 3 Performance ACO Proposed Rule, Quality and other reporting requirements, at 19,592; ACO Proposed Rule, Calculating the ACO quality performance score and determining shared savings eligibility, 42 C.F.R. 425.10(a); 425.10(b). 20

Relationship to Other Quality Programs To the extent possible and appropriate, CMS proposes to align the ACO quality measures with those of existing quality programs ACO participants/suppliers that are also eligible professionals (EPs) under the Physician Quality Reporting System (PQRS) may earn the PQRS incentive by meeting the ACO s quality performance standards* The e-prescribing (erx) and Electronic Health Record (EHR) Incentive program requirements may not be met through satisfying the ACO quality requirements Public reporting of ACO quality performance scores would be required At least 50 percent of an ACO s primary care physicians must be meaningful EHR users, using certified EHR technology, by the start of the second performance year * An EP would not qualify to earn a PQRS incentive as both a group that is part of an ACO and as an individual ACO Proposed Rule, Quality and other reporting requirements, at 19,570; ACO Proposed Rule, Incorporating other reporting requirements related to the Physician Quality Reporting System and electronic health records technology, at 19,599-601; 42 C.F.R. 425.11. 21

RISK SHARING MODELS 22

What is a Benchmark? Adjustment Factors Weighted average of beneficiary s Medicare A & B spend from prior 3 yrs Adjustment Factors Beneficiary risk & growth adjuster Growth in national FFS Medicare A&B spend* Geographic differentials Teaching hospital and DSH add-ons truncated at 99 th percentile ACO Benchmark ACO Proposed Rule, Payment and treatment of savings, 42 C.F.R. 425.7. 23

How are ACO members paid? ACO healthcare providers will continue to be paid fee-for-service under the Medicare payment system for which they are eligible (IPPS, PFS, etc.) ACOs will receive a payment for shared savings if: The ACO meets certain defined quality performance requirements AND Costs are below a performance target and minimum savings rate (MSR) set by CMS Non-ACO members do not share in savings Each ACO will decide how to internally share savings among members (formula will vary by ACO) ACO Proposed Rule, 42 C.F.R. 425.7; 425.7(c)(2). 24

Payment Models The rule proposes two payment tracks for participating in the Shared Savings Program: Design Track 1 Track 2 Element Years 1 & 2 Year 3 Years 1,2 & 3 (one-sided) (two-sided) (two-sided) Shared savings* X X X Savings cap X X X Shared losses X X Loss cap** X X * The total allowable shared savings in years 1 & 2 for the one-sided model is less than for the two-sided model ** The proposed rule provides a limit on maximum potential loss or risk for ACOs ACO Proposed Rule, Payment and treatment of savings, 42 C.F.R. 425.7(c) & (d) 25

Repayment of Losses CMS proposes methods by which to protect itself from losses Establish repayment mechanisms : - reinsurance - escrow funds - line of credit 25% withholding of any shared savings amount ACO Proposed Rule, Payment and treatment of savings, 42 C.F.R. 425.5(d)(6)(iii); 425.5(d)(6)(iv). 26

ADDITIONAL CONSIDERATIONS 27

Guiding Principles Individualized care Patient-Centeredness Patient access to clinical information and medical records Provider and patient partnership for planning Assessment of the care experience Integration of care with community resources Patient information flows across care transitions Sample Criteria Involve patients in ACO governance Communicate clinical i l information in a way that t is understandable d to beneficiaries Share decision-making in a way that considers beneficiaries unique needs, preferences, values and priorities ACO Proposed Rule, Eligibility and Governance, 42 C.F.R. 425.5(d)(15)(ii). 28

Patient Protections Proposed policy: Patients must be informed that their healthcare providers are participating in an ACO ACO marketing materials (e.g., brochures, web pages, etc.) must be approved dby CMS Patients can freely use hospitals and doctors outside an ACO Beneficiaries may opt out of having individual data, including Medicare Part D data, shared with an ACO The governing body must include Medicare beneficiary representative(s) served by the ACO CMS will monitor the ACO to prevent avoidance of at-risk beneficiaries ACO Proposed Rule, 42 C.F.R. 425.5(d)(5); ACO Proposed Rule, ACO Marketing Guidelines, at 19,551; 42 C.F.R. 425.6(a)(2); 425.19(f)&(g); 425.(d)(8)(ii); 425.12(b); 425.13(a). 29

Compliance Requirements Compliance Official Law Enforcement Compliance Plan Issue Identification Training Program Issue Reporting ACO Proposed Rule, Compliance plan, 42 C.F.R. 425.5(d)(10). 30

Complementary Guidance Additional ACO guidance documents were released in conjunction with the proposed rule: Office of Inspector General (OIG) Application to ACOs of Stark Law, Anti-Kickback Statute and Civil Monetary Penalties Law Department of Justice and Federal Trade Commission Antitrust Guidelines Internal Revenue Service (IRS) Tax exempt organization guidance Available at: http://www.cms.gov/sharedsavingsprogram/05_news.asp 31

SUMMARY 32

Summary ACOs are one of the first delivery reforms under ACA: Primary care provider participation is required to create an ACO; however, specialty care providers may also participate Individual Medicare providers and suppliers will continue to receive payments under the normal Medicare fee-for-service payment system Hospital and physician participation in the Medicare Shared Savings Program is voluntary Physicians who treat ACO beneficiaries but are not ACO participants p will not share in the potential benefits/risks under the Shared Savings Program Beneficiaries who are assigned to an ACO are free to see providers in or out of the ACO. 33

Comments To comment on the proposed rule: Electronic: http://www.regulations.gov gov By mail: Centers for Medicare & Medicaid Services Attention: CMS-1345-P P.O. Box 8013 Baltimore, MD 21244-8013 To be assured consideration, public comments must be received no later than 5:00 p.m. ET on June 6, 2011 34