Reed Tinsley, CPA

Final ACO regulations issues

Looking for some light reading, as in 696 pages? Well you're in luck - the final ACO regulations have been issues at:

http://www.ofr.gov/OFRUpload/OFRData/2011-27461_PI.pdf

The following are some of the changes made in the final regulations:

Providers will not be required to share downside risk in order to participate in an ACO and will be able to earn revenue sharing based on ACO savings earlier as opposed to Medicare retaining all the initial savings.

Quality measures that ACOs will have to meet to qualify for performance bonuses have been reduced to 33 from 65.

Community health centers and rural health clinics, which were not allowed to form ACOs in the draft proposal, will be allowed to lead ACOs.

The ACOs will also be told up-front which Medicare beneficiaries are likely to be part of their system as opposed to not knowing which patients were in the ACO until the contract ended.

CMS Says Physician Group Project Has Cut Costs, Improved Care

Last month CMS announced that its five-year Physician Group Practice Demonstration has reduced costs and improved quality of care. The project was launched in April 2005 and formed the blueprint for the Medicare accountable care organization program in the federal health reform law. The project offered financial bonuses to 10 health systems for meeting performance targets among 32 quality measures and spending at least 2% less on Medicare beneficiaries than nearby facilities. Seven of the systems met quality requirements for all 32 quality measures in the fifth year, and the other three systems met 30 of the measures. Over the five-year period, the 10 systems reduced costs by $134 million.

For more related information:

• "CMS: Four Medical Groups To Share Medicare Pilot Savings" (AHA News, 8/8).
• "Medicare Extends Experiment in Paying Doctors" (Abelson, "Prescriptions," New York Times, 8/8).
• "CMS: 7 of 10 Doc Groups in Demonstration Now Meet Performance Benchmarks" (Zigmond, Modern Physician, 8/8).

Physician alignment and ACOs

From www.fiercehealthcare.com:

As healthcare organizations and providers consider making the leap to an accountable care organization (ACO), a new survey finds that the biggest obstacle to forming one is physician alignment, according to healthcare staffing agency AMN Healthcare.

AMN asked 882 healthcare facility administrators and physicians about forming ACOs. Fifty-eight percent were in the process of doing so or considering it, but 42 percent did not see ACO formation in the foreseeable future.

Of those who were in or considering ACOs, 42 percent said physician alignment was the primary reason for not moving toward ACOs, as well as lack of capital (38 percent), lack of IT (31 percent), and lack of evidence-based treatment protocol (25 percent).

"While capital and data are essential to forming ACOs, the success of this emerging model turns on people," said AMN Healthcare president and CEO Susan Salka in a statement.  "Health facility leaders and physicians must align their interests, communicate and cooperate for this model to work," she said.

Of those respondents who are not considering ACOs, 40 percent similarly said physician alignment was a reason not to, followed by lack of capital (31 percent), lack of IT (26 percent), and lack of evident-based treatment protocol (23 percent). 

Obstacles	Respondents considering ACOs (58%)	Respondents not considering ACOs (42%)
Physician alignment	42%	40%
Lack of capital	38%	31%
Lack of IT	31%	36%
Lack of evidence-based treatment protocol	25%	23%

"Aligning the interests of physicians and hospitals has historically been difficult, as the two sides have often conflicted over patient care, cost, reimbursement and governance issues," states the survey. "These issues continue to resonate in the ACO model, as it is unclear who will be at the helm of these organizations, how risk will be shared, and how reimbursement will be calculated. In addition, in an era of physician shortages, it is uncertain whether or not hospitals and other facilities will be able to staff the primary care and other physicians required by federal regulations to form ACOs."

The majority of administrators and physicians still hope that ACOs will provide cost savings and improve quality over time, according to the survey.

New ACO initiatives announced

On May 17, 2011, CMS announced three new initiatives relating to ACOs that attempt to alleviate some of these problems.

Pioneer ACO Model

First, CMS announced that a new ACO model will be made available to providers this summer in the form of the "Pioneer ACO Model," which is designed for more mature integrated organizations ready to participate in shared savings now.  The Pioneer ACO Model is a three year program. During the first two years, Pioneer ACOs will participate in a shared savings payment policy with generally higher levels of shared savings and risks than what is currently being proposed under the Shared Savings Program.  In the third year, Pioneer ACOs that have demonstrated a specified level of savings over the first two years would be eligible to move a substantial portion of their payments to a population-based model. Under the population-based model, Pioneer ACOs would receive per-beneficiary, per-month payments that would replace in large part the current fee-for-service payment policy.  Applicant ACOs would have to serve at least 15,000 beneficiaries (5,000 in rural areas).  Also, by the end of 2012, Pioneer ACOs must demonstrate that 50% of the ACO's PCPs have met the requirements for meaningful use of electronic medical records ("EMR") and CMS will give further preference to applicant ACOs with advanced EMR capabilities.  Parties interested in participating in the Pioneer ACO Model must submit a non-binding letter of intent to CMS by June 10, 2011 and applications must be submitted by July 18, 2011.

Advance Payment ACO Model

Second, CMS is seeking comment on an Advance Payment ACO Model that would provide up-front capital to providers to support the formation of ACOs.  Advanced payments would be recouped from an ACO's earned shared savings.  Comments should be submitted by June 17, 2011.

Accelerated Development Learning Sessions

Third, CMS has set up Accelerated Development Learning Sessions as a way for provider groups to learn about how to coordinate patient care through ACOs. Four sessions will be offered in 2011 with the first session to tke place from June 20-22, 2011 in Minneapolis, MN.  These sessions are free and are intended to help providers develop an action plan for creating an ACO.

ACO application requirements

The Center for Medicare & Medicaid Services (CMS) has proposed regulations detailing several application requirements for those entities wishing to participate in shared savings programs. They would require an ACO to submit, with its application, materials that describe the ACO’s leadership and management structure, including the clinical and administrative systems designed to support the shared savings program’s three main goals: (1) better care for individuals; (2) better care for ACOs’ assigned patients; and (3) decrease in the cost of expenditures.

ACO Application Period

ACOs would have an annual application period during which they could apply and would be evaluated for appropriate eligibility requirements to participate in a shared savings program. CMS would review the applicants and approve applications for those organizations that are eligible prior to the end of each calendar year. If approved, the ACO agreement would be effective for a three-year period, with a 60-day notice termination provision and provisions for financial penalties if the ACO failed to continually meet program requirements.

ACO Application Documents

The ACO application process would require submission of documents that address the subject matter areas listed below:

• Rights and Obligations. Documents that describe the ACO participant’s rights and obligations in the ACO, the shared savings that will encourage ACO participants to adhere to the quality assurance and improvement program and the evidenced-based clinical guidelines;
• Quality Assurance and Clinical Integration. Documents that describe the scope and scale of the quality assurance and clinical integration program, including all relevant systems and processes;
• Organizational and Management Structure. Material that documents the organization and management structure, including an organizational chart, a list of committees and their structures, and job descriptions for senior administrative and clinical leaders;
• Medical Director/CMS Liaison. Documents confirming that a board-certified physician serves as the ACO medical director and is licensed in the ACO’s state, and that a principal CMS liaison is identified in the ACO’s leadership structure;
• Governing Body. Documents demonstrating that the governing body includes persons who represent the ACO participants and that the ACO participants hold at least 75 percent control of the governing body;
• Shared Savings Program. Documents that describe the applicant’s plans to: promote evidence-based medicine and patient engagement; report on internal and quality cost measures; and coordinate care, which may be through telehealth and other technologies. The ACO application must also include a description of the criteria that the ACO plans to employ for distributing shared savings among ACO participants;
• Patient Centered Criteria. Documents that describe how the ACO applicant will meet patient center criteria requirements; and
• Health Needs Evaluation. Documents that describe the ACO’s procedures for evaluating the health needs of its Medicare population, including consideration of diversity and a plan to address the needs of those persons.

Upon request, the ACO would be required to provide documents effectuating its formation and operation, including, for example, charters, bylaws, and articles of incorporation, and a description of the remedial process that will apply when ACO participants and suppliers fail to comply with the internal procedures and performance standards. Such processes would have to include corrective action plans and the circumstances under which expulsion may occur.

General ACO Applicant Requirements

ACO applicants would be required to engage in a detailed analysis of their market shares and, if those shares exceeded a 50 percent threshold, the ACO applicant would have to obtain approval from the federal antitrust enforcement agencies before CMS would approve its application for participation in the shared savings program.

ACOs would be required to have systems in place to identify high-risk individuals and processes to develop individual care plans for targeted patient populations. The plans would have to:

1. be tailored to the beneficiary’s health and psychosocial needs;
2. account for beneficiary preferences and values; and
3. identify community and other resources to support the beneficiary in following the plan.

ACO Applicant Certifications

The ACO application process would require that ACO officers or directors certify that the applicant meets certain requirements, including but not limited to:

• Legal Entity. That the ACO is recognized as a legal entity under state law and authorized by the state to conduct its business. An ACO with operations in multiple states would have to certify that it is recognized as a legal entity in the state in which it was established and that it is authorized to conduct business in each state in which it operates;
• Accountability. That to the best of his or her knowledge, information and belief that the ACO participants are willing to become accountable for, and to report to CMS on, the quality, cost and overall care of the Medicare fee-for-service beneficiaries assigned to the ACO;
• Compliance With ACO Agreement. That to the best of his or her knowledge, information, and belief the ACO participants agree to the requirements set forth in the three-year agreement between the ACO and CMS; and
• Accuracy of Information Submitted to CMS. The ACO must certify the accuracy, completeness and truthfulness of information contained in its shared savings program application, three-year agreement, and submissions of quality data and other information;

ACO Applicant Fraud and Abuse Protections

Lastly, there would have to be criteria to establish mechanisms to protect the shared saving programs from fraud and abuse and to ensure that such programs do not become a vehicle for, or increase the potential for, fraud and abuse in other parts of the Medicare program. Thus, CMS has proposed that ACOs must have a compliance plan that addresses how the ACO will comply with the applicable legal requirements. The plan must include a designated compliance officer, who is not legal counsel to the ACO and who reports directly to the ACO’s governing body. The plan should also include mechanisms for identifying and addressing compliance problems related to the ACO’s operation and performance; methods for employees or contractors to report suspected concerns related to the ACO; compliance training for employees and contractors; and requirements for reporting suspected violations to appropriate law enforcement agencies.

Conclusion

The ACO application process is formidable and will require the guidance of competent health care legal counsel.

Who can form an ACO?

The Accountable Care Act specified certain ACO participants that are eligible to participate in the Shared Savings Program and granted CMS the authority to include other types of ACO participants. CMS chose to expand the list of eligible ACO participants beyond the statutory mandate to allow for innovation in possible ACO models and to encourage movement away from the current fee-for-service model with the addition of shared savings incentives. CMS chose this open approach despite concerns that the inclusion of other providers would not produce the efficiencies CMS was attempting to incentivize providers to create. (For example, CMS considered that the inclusion of specialists alongside primary care physicians in an ACO might cause inefficiencies such as duplicative or unnecessary lab testing or imaging, but nevertheless included specialists.) Under the ACA and the proposed CMS rule, ACO participants authorized to form an ACO are:

• 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

• Critical Access Hospitals billing under Method II

CMS specifically discussed the ability of Federally Qualified Health Centers (FQHCs) or Rural Health Centers (RHCs) to form their own ACOs and found that there is a lack of reporting of the data elements needed to assign beneficiaries to an FQHC or RHC as an independent ACO. Medicare, however, recognized the value of these entities, especially in rural areas. Consequently, while they may not form their own ACOs, FQHCs and RHCs may be participants along with other Medicare enrolled providers (such as SNFs) and suppliers. In addition, in recognition of their importance in the healthcare system, the proposed rule provides for additional incentives for FQHC and RHC participation in an ACO. CMS is seeking comments on whether other provider types should be eligible to independently participate in the Shared Savings Program.

Eligible entities to form an accountable care organization

Under the proposed rule, an ACO may include the following types of groups of providers and suppliers of Medicare-covered services: (1) ACO professionals (i.e., physicians and hospitals meeting the statutory definition) in group practice arrangements; (2) Networks of individual practices of ACO professionals; (3) Partnerships or joint ventures arrangements between hospitals and ACO professionals; (4) Hospitals employing ACO professionals; and (5) critical access hospitals. In addition, the Secretary of Health and Human Services (the Secretary) may, by rule, further expand the eligibility to participate to include additional Medicare enrolled entities such as federally qualified health centers (FQHCs) and rural health clinics (RHCs). In the interim, CMS has proposed to provide an incentive for ACOs to include RHCs and FQHCs by allowing ACOS that include such entities to receive a higher percentage of any shared savings.

Physician thoughts on healthcare reform

Last year the Physicians Foundation conducted a survey asking physicians about their thoughts on healthcare reform; the following are some of the more interesting responses: 

The majority of physicians (60%) said health reform will compel them to close or significantly restrict their practices to certain categories of patients. Of these, 93% said they will close or significantly restrict their practices to Medicaid patients, while 87% said they would close or significantly restrict their practices to Medicare patients. 

The majority of physicians (59%) said health reform will cause them to spend less time with patients. 

While more than half of physicians said health reform will cause patient volumes in their practices to increase, 69% said they no longer have the time or resources to see additional patients in their practices while still maintaining quality of care. 

Only 10% of physicians said reform will improve the quality of patient care they are able to provide, while 56% said reform will diminish the quality of care they are able to provide. 

With several months to consider the content and direction of the new law, 39% of physicians said they are now feel more negative about health reform than when it initially passed, compared to only 10% who now feel more positive. And, 67% said their initial reaction to passage of the 2010 Patient Protection and Affordable Care Act was either “somewhat negative” or “very negative.” 

In response to reform, 40% of physicians said they would drop out of patient care in thenext one to three years, either by retiring, seeking a non‐clinical job within healthcare, or by seeking a non‐healthcare related job. 

The great majority of physicians surveyed (86%) believe the viewpoint of physicians was not adequately represented to policy makers during the run‐up to passage of health reform. 

Physicians are almost evenly divided over the relative importance of SGR (36%) and health reform (34%) to their practices, while 30% are unsure which will have the greatest impact. 

View the full survey and more at www.physiciansfoundation.org.

 

Summary of new ACO regulations

As you know by now, the Centers for Medicare & Medicaid Services (CMS) have issued proposed rules that would implement Section 3022 of the Affordable Care Act. Section 3022 requires the Secretary of Health and Human Services to establish a Shared Savings Program by January 1, 2012. CMS notes that this program is intended to encourage providers of services and suppliers (e.g., physicians, hospitals and others involved in patient care) to create a new type of health care entity, which the statute calls an "Accountable Care Organization (ACO)."

Here is a good summary of the new regulations:

http://www.grantthornton.com/staticfiles/GTCom/Health%20care%20organizations/Washington%20Bulletin/2011/WB_Apr4_2011_CMS%20Issues%20Long%20Awaited%20ACO%20Proposed%20Rules.pdf?utm_source=Grant+Thornton&utm_medium=email&utm_campaign=Washington+Bulletin%

ACO regulations finally arrive - must read for all physicians

The Department of Health and Human Services (HHS) released regulations yesterday on accountable care organizations (ACOs). The rules will guide provider organizations in setting up exchanges of healthcare data to improve care and reduce costs, as mandated under the Accountable Care Act.

http://www.ofr.gov/OFRUpload/OFRData/2011-07880_PI.pdf