NATIONAL ASSOCIATION OF COMMUNITY HEALTH CENTERS. Briefing Paper on the Proposed Medicare Shared Savings Program

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1 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. 1 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). 2 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. 3 ACO participants would include: 1) ACO professionals 4 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 (b)(3)) 5 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 FR (Apr. 7, 2011) FR FR An ACO professional would mean a physician, physician assistant, nurse practitioner, and clinical nurse specialist. 76 FR FR Conversely, to ensure that physicians and other entities upon which assignment is not dependent (that is, hospitals, FQHC, RHCs, specialists) can participate in more than one ACO, and thereby facilitate the creation of competing ACOs, these providers and suppliers would be committed to the 3-year agreement but would not be exclusive and would have the flexibility to join another ACO. 76 FR

2 Note: FQHCs would not be allowed to form their own ACOs independent from other eligible ACO participants. 7 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). 8 II. Legal Entity and Governance Under the proposed rule, an ACO would be required 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 the state in which it operates. 9 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. 10 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). 11 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. 12 ACO participants would be required to control at least 75% of the governing body. 13 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. 14 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. 15 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 FR It is, however, possible for [FQHCs] to join as an ACO participant in an ACO containing one or more of the statutory organizations eligible to form an ACO.... Id. at At this time, FQHC claims for services furnished prior to January 1, 2011 do not include HCPCS codes that identify the specific service provided. Thus, although the claims do contain information concerning the attending physician and the rendering health professional (for example, physician, physician assistant, nurse practitioner), who actually provided the service, they do not currently provide for associating the rendering provider with the specific services furnished to the beneficiary. 76 FR FR FR FR [A]n ACO must provide not only their TINs but also a list of associated NPIs for all ACO professionals, including a list that identifies physicians that provide primary care. Id. at FR FR FR Id FR

3 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 17 To enter into a contract with CMS agreeing to a three-year agreement term and oneyear performance periods 18 To maintain at least 5,000 beneficiaries 19 To have a sufficient number of ACO professionals for the number of Medicare fee-forservice beneficiaries assigned to the ACO 20 To notify its beneficiaries that it is participating in an ACO 21 To submit its marketing materials to CMS for approval 22 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. 23 Additionally, the ACO would also be required to meet certain quality and performance standards. Beneficiary Assignment A beneficiary would not have to enroll in an ACO; rather, CMS proposes to use a methodology to assign beneficiaries to an ACO. Moreover, assignment would not require that the beneficiary continue to receive his or her care by the providers in the ACO it merely would determine the population of Medicare fee-for-service beneficiaries for whose care the ACO would be accountable. This assignment would determine whether, over the course of a performance year, the ACO had achieved savings against the benchmark. 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. 24 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 FR Id FR Id FR FR Note that CMS would withhold 25 percent of any earned performance payment to guard against losses in future years as well as to provide an incentive to ACOs to stay in the program for the full three-year period. At the end of the 3-year period, any positive balances would be returned to the ACO. If the ACO did not complete the three-year term, it would forfeit any withheld savings FR CMS would define primary care services identified by HCPCS codes ; ; ; and G0402, G0438 and G FR

4 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. 25 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. 26 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%. 27 This benchmark would be updated annually during the agreement period. 28 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. 29 Calculation of Savings Following an ACO s performance year, CMS proposes to make beneficiary assignments using claims data from that performance year. For each performance year, CMS proposes to determine whether the actual average per capita Medicare expenditures under the ACO are below the applicable benchmark. A minimum savings rate (MSR) would be the percentage of the benchmark that an ACO expenditure savings would have to exceed in order to qualify for shared savings. 30 In order to qualify for shared 25 In its preamble to this proposed rule, CMS states that it is reluctant to impose through regulation [the requirement for FQHCs to provide the data elements needed for assignment] without either a statutory requirement or clear support for such a regulatory change from the FQHC and RHC community. 76 FR Id FR Id FR FR This mechanism would allow for normal variations in health care spending based on the number of assigned beneficiaries within the ACO: as the number of assigned beneficiaries increases, the MSR would get smaller. 76 FR

5 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%. 31 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. 32 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. 33 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. 34 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 FR FR FR FR FR

6 Increased Savings Incentives for FQHC and RHC Participation Acknowledging the important role of FQHCs 36 (but asserting their inability to participate independently in the MSSP), CMS proposes that ACOs would receive an increased percentage of savings based on the percentage of their beneficiaries who were to visit an FQHC at least once during a performance year. 37 One-sided models would receive up to an additional 2.5% points during the first two years of agreement and two-sided models would receive up to an additional 5% points according to the following tables: 38 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. 39 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. 40 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. 36 FQHCs and RHCs have long delivered comprehensive, high-quality primary health care to patients regardless of their ability to pay, and increase access to health care through innovative models of community-based, comprehensive primary health care that focus on outreach, disease prevention, and patient education activities. FQHCs provide high-quality care to rural and urban populations alike by focusing attention on improving public health through preventive care in addition to direct patient care. Not only do health centers provide critical, high quality primary care in the Nation s neediest areas, but reports have shown that the health center model of care can reduce the use of costlier providers of care, such as emergency departments and hospitals. Id. at FR FQHCs would be defined under 42 CFR (b) to include those receiving grants under Section 330 of the Public Health Service Act, those eligible to receive such funding (FQHC look-alikes), and outpatient health programs/facilities operated by tribal organizations. Id. at FR CMS would require ACOs to specifically identify their FQHC/RHC participant TINs in their initial and annual reporting of ACO participant TINs, and disclose other provider identifiers as requested to assure proper identification of these organizations for the purpose of awarding the payment preference. 76 FR "[CMS proposes] to require ACOs to provide a description in their application of the criteria they plan to employ for distributing shared savings among ACO participants and ACO providers/suppliers, and how any shared savings will be used to align with the aims of better care for individuals, better health for populations, and lower growth in expenditures." 76 FR

7 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. 41 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 At the same time this proposed rule was released, the Office of Inspector General (OIG) released a notice on proposed waivers to the fraud and abuse laws (the Stark physician self-referral law, Anti- Kickback Statute (AKS), and the Civil Monetary Penalty (CMP) law) related to the MSSP; the Federal Trade Commission (FTC) and Department of Justice also issued a proposed statement of enforcement 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. Submission of comments on the proposed rule, due to CMS no later than 5 p.m. on June 6, 2011, will need to persuade CMS to improve the proposed rule to allow FQHCs to participate fully in the Medicare Shared Savings Program so that medically underserved communities can benefit from ACOs FR

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