CMS ACO Proposed Regulations

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1 CMS ACO Proposed Regulations May 2011 Proposed CMS ACO Regulations Proposed Regulations issued March 31, 2011 Comments due back June 6, 2011 Requires 3 year binding commitment Formal Legal Structure Required Legal State entity identified by TIN Includes Medicare FFS beneficiaries 1

2 Who is eligible to Form ACO? ACO professionals include physicians, NPs, physicians assistants and clinical nurse specialists Group Practice Professionals Individual Practice Associations Partnerships & Joint Ventures with hospitals Hospitals employing ACO Professionals Proposed CMS ACO Regulations Provider governance at least 75% control Governance also requires at least one beneficiary Must demonstrate clinical & administrative functions Compliance Plan mirrors OIG published guidance Shared savings plan must demonstrate Triple AIM Proposed CMS ACO Regulations Adequate numbers of PCPs to serve beneficiary base Requires 50% meaningful use by 2 nd year Have at least 5,000 FFS beneficiaries Combination of quality & financial incentives 2

3 ACO Reality Bar is set high with quality & financial expectations Expect applications Nationally Promote evidence based medicine Report on quality and cost metrics PCPs must be exclusive to one ACO Mixed reaction to complicated rules Beneficiary Attribution Retrospective assignment based on primary care services Requires 3 year look back period PCP assignment based on plurality E&M visits for GP, FP, IM and Geriatric physicians Excludes physician extenders Requires beneficiary notification Marketing Plans must be filed and approved Quality & Performance 65 Quality Measures 5 domains Patient Experience Patient Safety Preventive Health Care Coordination At- risk population/frail elderly health Quality measures must be achieved for shared savings Initial year requires accurate reporting only 3

4 Financial Models Benchmark claims are weighted for three years: Current year - 60% Year 2-30% Year 3 10% Adjusted for high cost claims Two Risk Model options One sided upside only year 1&2 then full risk year 3 Two sided full risk all years Financial Models Minimum Sharing Rate ranges from 3.9% to 2% Maximum sharing is 50% for one sided, and 60% two sided model Maximum sharing cap 7.5% for one sided Maximum sharing cap 10% for two sided Proposed 25% withhold of Shared Savings Incentives for FQHC inclusion 2.5% - 5.0% additional CHC Considerations Proposal reflect FQHCs can t create independent ACOs Data issues during look back period due to billing processes cited as major reason for exclusion Attribution of patients despite incentives is not clear All ACOs are in full risk model by year three Discussions underway to formulate opportunity to lead and fully participate in Medicare ACO model if desired Careful consideration of precedent on Medicaid models is an area we are tracking 4

5 Accountable Care Organizations under the Proposed Medicare Shared Savings Program: What Health Centers Need to Know Presented by: Adam J. Falk, Esq. Partner, Feldesman Tucker Leifer Fidell LLP Overview In early April, CMS issued a proposed rule to implement a portion of the Patient Protection and Affordable Care Act ( ACA ) known as the Medicare Shared Savings Program ( MSSP ). This presentation will provide a summary of the proposed rule and will focus on how the MSSP may affect FQHCs and their patients. These are proposed rules only and are subject to change. Although the MSSP applies to Medicare only, the proposed rule could shape future ACO programs in Medicaid. 14 What is the purpose of the MSSP? Goals of the program: Promote accountability for a patient population, Coordinate items and services under Medicare Parts A and B, and Encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery. These goals will be accomplished through groups of providers commonly known as Accountable Care Organizations ( ACOs ). An ACO is a group of providers working together to manage and coordinate care in this case - for Medicare fee-for-service beneficiaries. 15 5

6 How will providers be paid in the MSSP? Under the MSSP, Medicare providers and suppliers are paid as they would be under the original Medicare program. For FQHCs, this means cost reimbursement on a per-visit basis. ACOs that both decrease costs and meet certain quality performance standards are eligible to receive payments known as shared savings. Those payments are then distributed to the ACO s participating providers. In certain circumstances, the ACO may also be responsible for financial losses. Outside of the MSSP, there are other models of ACOs that require an ACO to take greater financial risk through the receipt of capitation payments. As outlined in the proposed rule, the MSSP program does involve not capitation payments. 16 How is an ACO different from an HMO? An HMO is a type of insurance that accepts financial risk for incidence of illness and the costs of medical treatment for an enrolled population of members. An ACO is provider-based entity that accepts financial risk for the costs of medical treatment for an assigned population of patients. Patients enrolled in a Medicare Advantage plan cannot be assigned to an ACO in the MSSP. Only patients in the original Medicare program (i.e., Parts A & B) can be assigned to an ACO. 17 Which providers can form an ACO? Under the proposed rule, only the following types of providers may form an ACO independently: ACO professionals in group practice arrangements The term ACO professionals refers to physicians, PAs, NPs and clinical nurse specialists. Networks of individual practices of ACO professionals Partnerships or joint venture arrangements between hospitals and ACO professionals Hospitals employing ACO professionals CAHs that bill under Method II The proposed rule does not permit FQHCs to form their own ACOs independently from the above providers. 18 6

7 Why can t FQHCs form an ACO? CMS believes it does not possess 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 for FQHCs. See 76 FR CMS states that it needs such information for beneficiary assignment. Only those ACO participants upon whom beneficiary assignment can be based may independently form an ACO. 19 What are the requirements for participation? To participate in the MSSP, an ACO would be required to agree to the following: Submit a timely application to CMS Enter into a contract with CMS agreeing to a three-year agreement term with one-year performance periods Maintain at least 5,000 beneficiaries Have a sufficient number of ACO professionals for the number of Medicare FFS beneficiaries assigned to the ACO Notify its beneficiaries that it is participating in an ACO Submit its marketing materials to CMS for approval 20 How will CMS link a provider with an ACO? To associate Medicare providers with a particular ACO, an ACO would report the Medicare-enrolled TINs of its participants to CMS, along with a list of associated NPIs for all ACO professionals. The ACO would be identified by a separate TIN, which need not be enrolled in Medicare. In addition, an ACO would have to certify that it is a legal entity in the state in which it was established and is authorized to conduct business in the state in which it operates. 21 7

8 How must the ACO be governed? ACOs must have a mechanism for shared governance. The governing body (or the like) would consist of ACO participants (at least 75%) and Medicare beneficiaries. Each ACO participant would be required to choose a representative from within its organization to represent it on the governing body. Each ACO participant would be required to have appropriate proportionate control over the ACO s decision making process. 22 How does CMS propose to assign beneficiaries? Beneficiaries would be assigned to an ACO based on an analysis of claims data of where they received a plurality of their primary care services from a physician. A primary care physician is defined as a physician with a primary specialty designation of family medicine, internal medicine, geriatric medicine, or pediatric medicine. Beneficiary assignment excludes primary care services rendered by NPs, PAs, and CNSs. 23 Could FQHC patients be assigned to an ACO? CMS does not believe it possesses sufficient data from claims filed by FQHCs to assign FQHC patients to an ACO. CMS believes it cannot attribute specific services furnished to an FQHC patient to the rendering health practitioner. Only in the unlikely scenario in which a patient received a plurality of his/her primary care services from a non-fqhc physician that also participates in an ACO could an FQHC patient be assigned to an ACO. 24 8

9 How will assignment affect beneficiaries choice of provider? A beneficiary does not enroll in an ACO; instead, CMS assigns the beneficiary to an ACO. The beneficiary can receive care from any Medicare provider; he or she is not required to see only providers participating in the ACO. 25 How does an ACO know which beneficiaries will be assigned to the ACO? Prior to the start of the performance period, CMS proposes to examine the most recent 12 months of data to identify beneficiaries that it expects will be assigned to the ACO (based on where they received a plurality of their primary care services from a physician). Even though the population actually served by the ACO during the performance period may be slightly different from this estimate, CMS believes that the ACO can target care improvements to this expected population. CMS would share aggregate and beneficiary identifiable data to help an ACO understand its patient population. A beneficiary would be able to opt-out of having his or her claims data shared with the ACO. 26 How will CMS calculate the savings? CMS will determine the shared savings by calculating the difference between: The estimated amount of Medicare expenditures for a population of beneficiaries assigned to the ACO (the benchmark ) and The actual amount of Medicare expenditures for the population of beneficiaries who were assigned to the ACO. 27 9

10 How will CMS calculate the benchmark? To establish the benchmark, CMS would examine Medicare expenditures for beneficiaries who would have been assigned to the ACO in each of the three years prior to the start of the contract period. The benchmark is the same throughout the threeyear contract, adjusted for overall growth and beneficiary characteristics, including health status. The data would also be weighted so that the most recent years counts 60%, the year prior 30%, and the year prior to that 10%. 28 How would CMS calculate the Medicare expenditures of patients in the ACO? At the end of each contract year, CMS would assign beneficiaries to ACOs using claims data from the last 12 months to identify where beneficiaries actually received the plurality of their primary care. Using these assignments, CMS would then calculate the total Medicare expenditures for beneficiaries assigned to the ACO. 29 What are the qualifications to receive shared savings? In order for an ACO to receive any shared savings, the ACO must exceed a minimum savings rate ( MSR ) and meet quality performance criteria. The MSR is the percentage of the benchmark that an ACO would have to exceed in order to qualify for shared savings. The MSR varies with the number of beneficiaries in the ACO, but in no case is less than 2% of the benchmark. ACOs that do not meet the quality performance standards for all proposed measures would not be eligible for shared savings, regardless of the amount of shared savings

11 What are the quality performance measures for ACOs? 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 addition, at least 50% of an ACO s primary care physicians must meet electronic medical record meaningful use standards as defined by the HITECH Act. 31 How much financial risk must an ACO take? To determine what percentage an ACO would be entitled to recover in shared savings, the ACO would participate in one of two risk models: one-sided model two-sided model An ACO would choose between the two models for the initial three-year agreement period, but after that period all ACOs would be required to move to two-sided model. 32 What is the one-sided risk model? The one-sided model would be available to ACOs with less experience and those that desire less risk. For the first two years, the one-sided model would provide shared savings only i.e., no risk of loss. In the third year, 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

12 What is the two-sided risk model? The proposed two-sided model would be available to more experienced ACOs 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. 34 What are the incentives for including FQHCs patients in the ACO? Acknowledging the important role of FQHCs, CMS proposed that ACOs receive an additional percentage of savings if ACO assigned beneficiaries visited an FQHC at least once during a contract year. One-sided models would receive up to an additional 2.5% points during the first two years of agreement Two-sided models would receive up to an additional 5% additional savings 35 How would the ACO distribute shared savings or pay for losses? Under the proposed rule, an ACO would be required to describe its method of distribution of savings in its application. An ACO must also decide how to fund repayment to CMS in the event of loss but CMS would be required approve the method. The ACO would need to disclose on its application the percentage of shared losses that each ACO participant would be responsible for and the participants would need to sign an agreement establishing this liability

13 What other legal issues raised by the MSSP? Fraud and abuse Stark physician self-referral, Anti-Kickback, and Civil Monetary Penalty laws enforced by the OIG. Antitrust Enforced by the Federal Trade Commission & Department of Justice Tax Exemption Enforced by the Internal Revenue Service 37 What if an FQHC participates in other CMS demonstrations? A provider would not be allowed to participate in an ACO under the MSSP if, at the same time, it were to participate in The Independence at Home Medical Practice Demonstration program, A medical home demonstration with a shared savings element, or A demonstration administered by the Center for Medicare and Medicaid Innovation (CMMI) which has a shared savings component. 38 Additional Resources Statute: ACA 3022 / SSA Proposed Rule: 76 FR (April 7, 2011) Related Notices and Guidance https://www.cms.gov/sharedsavingsprogram/30_statut es_regulations_guidance.asp#topofpage 39 13

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