Medicare Shared Savings Program & Accountable Care Organizations. American Osteopathic Association National Member Webinar January 5, 2012

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1 Medicare Shared Savings Program & Accountable Care Organizations American Osteopathic Association National Member Webinar January 5, 2012

2 Overview AOA Position on Practice Transformation and Integrated Health Systems Medicare Shared Savings Program Legislative & Regulatory History Medicare Shared Savings Program (MPPS) Final Rule

3 AOA Policy on Integrated Delivery Models The AOA supports the establishment of new integrated delivery models like accountable care organizations (ACO) that will achieve the triple aim of better care for individuals, better health for populations, and lower per capita spending for Medicare beneficiaries. We are especially supportive of new delivery models that enhance and promote the role of primary care physicians as the foundation for the health care system and place emphasis on the promotion of coordinated care across the health care spectrum.

4 LEGISLATIVE & REGULATORY HISTORY

5 Legislative History The Medicare Shared Savings Program was established by Section 3022 of the Affordable Care Act (P.L ). The Medicare Shared Savings Program must begin by January 1, The Patient Protection and Affordable Care Act was enacted into law on March 23, 2010.

6 Regulatory History The Centers for Medicare & Medicaid Services (CMS) issued a Notice of Proposed Rulemaking (NPRM) on March 31, Comments were due June 6, 2011 The final rule was published on October 20, 2011 The Department of Justice (DOJ), the Federal Trade Commission (FTC), and the Internal Revenue Service (IRS) have issued final rules respectively on the antitrust, fraud and tax provisions.

7 Regulatory History HHS released 3 additional ACO programs through the Center for Medicare and Medicaid Innovation (CMMI) on May Pioneer Model 2. Advanced Payment Model 3. Accelerated Learning Programs

8 Disclaimer This presentation only contains information on the major changes made to the proposed rule which was released on March 31, 2011 and finalized on October 20, You can access information on the proposed and final rules at

9 MAJOR CHANGES IN THE FINAL RULE

10 Governance ACO participants control 75% of governing body ACO must have senior-level physician medical director

11 Assignment of Beneficiaries Final rule uses a hybrid of prospective assignment with retrospective assignments ACO will receive list of patients likely to be assigned prior to year 1 based upon criteria outlined in proposed rule. Specialist visits for primary care services will count towards assignment if no primary care physician services are available.

12 Risk Models Track 1 ACOs can earn shared savings independent of penalties for spending above their benchmark. First dollar shared savings once minimum threshold is reached

13 Alternative Shared Savings Programs Center for Medicare and Medicaid Innovation will offer alternative shared savings program Bundled payment initiative Comprehensive primary care initiative Innovation grants Advanced payment ACOs

14 Quality Reporting Quality measures reduced from 65 to 33 Requirement that 50% of primary care physicians be meaningful users of electronic health records removed Hospital acquired condition (HAC) measures removed

15 FTC, DOJ, CMS, OIG No mandatory antitrust review Expedited 90-day voluntary review Self-referral and gainsharing waivers Waiver for care coordination and beneficiary inducement programs

16 MEDICARE SHARED SAVINGS PROGRAM

17 Accountable Care Organizations (ACO) An Accountable Care Organization (ACO) encourages providers of services and suppliers to create a new type of health care entity, which the statute calls an Accountable Care Organization (ACO), that agrees to be held accountable for improving the health and experience of care for individuals and improving the health of populations while reducing the rate of growth in health care spending.

18 Triple Aim Goals of the Shared Savings Better care for individuals Program Better health outcomes for populations Lower per capita cost Promote accountability for a population of Medicare beneficiaries Improve the coordination of Medicare Fee-For-Service items and services Improve care transitions between providers and services Encourage investment in infrastructure and redesigned care processes for high quality and efficient service delivery Incent higher value care

19 DEFINITIONS & GOALS

20 Definition An Accountable Care Organization (ACO) encourages providers of services and suppliers to create a new type of health care entity, which the statute calls an Accountable Care Organization (ACO), that agrees to be held accountable for improving the health and experience of care for individuals and improving the health of populations while reducing the rate of growth in health care spending.

21 Who Can Be an ACO Eligible Entities 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 Such other groups or providers of services and suppliers as the Secretary determines appropriate Critical Access Hospitals (CAHs) Must bill under Method II payment model Federally Qualified Health Centers (FQHC) and Rural Health Clinics (RHC) employing ACO professionals

22 What is an ACO Professional? An ACO professional is a physician, which refers to a doctor of medicine or osteopathy, or a practitioner, which includes physician assistants, nurse practitioners, or clinical nurse specialists. The term hospital means a hospital paid under the hospital inpatient prospective payment system (PPS).

23 BENEFICIARY ASSIGNMENT & DATA SHARING

24 Beneficiary Assignment Beneficiaries retain freedom of health care choices. Beneficiaries are assigned prospectively based on plurality of primary care services during prior 3-year period. Only DO/MD services NP, PA data is applicable for beneficiary assignment, but cannot be sole criteria Services provided by specialists are eligible for beneficiary attribution if there is an absence of primary care services Beneficiaries are aligned with only one ACO at a time. Beneficiaries may opt-out of ACO data sharing, but beneficiary data still counts towards benchmark and risk.

25 Definition of Primary Care Services Beneficiaries are assigned based on care provided by primary care physicians (internal medicine, general practice, family practice, and geriatric medicine) who are providing the defined primary care services. Codes include: , , , G0438, G0439 and G0402. Other prevention and immunization codes also included. Services provided by nurse practitioners and physician assistants will count towards the assignment of beneficiaries, but cannot be the sole criteria.

26 Challenges Methodology for Attributing Patients to ACOs The ACO will not know for sure which patients they will get savings credit for until after the year is over A patient is attributed for a full year, so costs incurred before new patients started using the ACO s doctors will be attributed to the ACO As a result, ACOs with stable patient populations are more likely to get credit for savings they achieve, and avoid penalties for prior costs Methodology for Projecting Increase in Cost Per Patient CMS will assume costs per patient will increase by the absolute amount of increase nationally (not the percentage growth) This means it will be harder for high-cost regions to achieve minimum savings Risk Adjustment in Projecting Future Costs CMS will make adjustments for the relative health status of new patients so that ACOs are not penalized for getting new, sicker patients CMS will not make adjustments to cost projections if existing patients get sicker, so the ACO will be penalized if existing patients get sicker CMS will make adjustments to cost projections if existing patients get healthier, which means the ACO won t get credit for savings from improving the health of its existing patients

27 Data Sharing Aggregate CMS will share with ACO aggregate data at the start of the 3- year agreement Data covers beneficiaries who may be assigned based on previous 12 months data No beneficiary consent required Four Primary Data Sets Name, date of birth, gender, HICN of historically assigned beneficiaries CMS will share at the beginning of the agreement period No beneficiary consent required Beneficiary Identifiable Data CMS will share on request Data limited to beneficiaries who saw participating ACO professional in previous 12 months Beneficiary may optout of data sharing

28 QUALITY IMPROVEMENT CRITERIA

29 1. Ongoing patient experience evaluation 2. Patient involvement with governance 3. Evaluating population needs and diversity 4. Identifying high risk individuals Use of individualized care plans Use of community resources Patient Centeredness 5. Coordination of care Use of EHRs and exchange of e-information between sites of care 6. Communicating clinical knowledge Use of shared decision making 7. Beneficiary access to medical records Written standards that describe related policies and procedures 8. Internal Process to measure clinical service by physicians as part of the quality assurance program requirements

30 Quality Improvement CMS proposes 33 measures in 4 quality domains. Use same weight for all quality domains To meet quality performance standards an ACO must: Report on quality measures Meet applicable performance criteria Year 1 ACOs are only required to report quality date with performance evaluation in years 2 and 3 Higher standards and additional measures over time Quality benchmarks based on Medicare fee-for-service and Medicare Advantage or ACO performance data. ACOs that don t meet the quality performance thresholds for all proposed measures will not be eligible for shared savings.

31 Quality Measures Quality Domain ACO Quality Measures Reports Results Patient/Caregiver Experience Care Coordination/ Patient Safety Preventive Health At Risk Population Source American Medical Association CAHPS Measures (1 6-part composite) CAHPS Health/Functional Status Risk-Adjusted All-Cause Readmissions Ambulatory Care Sensitive Admits (2) PCPs Using EHRs (double-weighted) Medication Reconciliation Screening for Fall Risk Immunizations (2) Weight Screening Tobacco Use/Cessation Depression Screening Cancer Screening (2) Blood Pressure Screening Diabetes Control (1 5-part composite) Diabetes Hemoglobin Control Hypertension Control Ischemic Vascular Disease (2) Heart Failure Coronary Artery Disease Composite (2) Year 1 Years 1-3 Years 1-2 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Year 1 Years 1-2 Years 1-2 Year 1 Year 1 Year 1 Year 1 Years 1-2 Years 1-2 Years 2-3 None Year 3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Year 3 Year 3 Years 2-3 Years 2-3 Years 2-3 Years 2-3 Year 3 Year 3

32 Shared Savings Depends on Quality Step 1: Step 2: Step 3: Step 4: Score each individual measure compared to national or absolute benchmarks (0 if below 30%) Combine scores for each measure into a score for each of the 4 domains Combine scores for each domain into a total score between 0% and 100% Determine actual share of savings by multiplying % score by maximum % savings Performance on Measure Score % 100.0% 80-89% 92.5% 70-79% 85.0% 60-69% 77.5% 50-59% 70.0% 40-49% 62.5% 30-39% 55.0% 0-29% 0.0% Weight for Measure Weight for Domain Domain Patient/Caregiver Experience 50.0% 25% Care Coordination/Patient Safety 14.3% 25% Preventive Health 12.5% 25% At Risk Population 14.3% 25% Source American Medical Association

33 SHARED SAVINGS

34 Two Risk Models One-Sided Risk Model Two-Sided Risk Model

35 How Shared Savings Works Healthcare Spending Source American Medical Association

36 Step 1: Current Spending Levels for ACO Patients Healthcare Spending Baseline Spending Source American Medical Association

37 Step 2: Future Spending Projected Based on National Trends Healthcare Spending Projected Spending Baseline Spending Source American Medical Association

38 Step 3: Medicare Totals What Was Actually Spent on the Patients Healthcare Spending Baseline Spending Projected Spending Actual Spending Note that total spending can still be higher than the prior year, it just needs to be lower than what is projected Source American Medical Association

39 Step 4: If Savings Exist, Medicare Shares With the ACO Healthcare Spending Baseline Spending Projected Spending Actual Spending Initial Portion of Savings Accrues to Medicare Share of Savings Returned to ACO Source American Medical Association

40 Shared Savings Increase If Costs Remain Low Healthcare Spending Baseline Spending Medicare Share ACO Share Projected Spending Actual Spending Medicare Share of Savings ACO Share of Savings Source American Medical Association

41 What Happens if Costs Increase Above Expected Growth Rate? Actual Spending Healthcare Spending Projected Spending Baseline Spending Source American Medical Association

42 Track 1 No Penalty Healthcare Spending Actual Spending Projected Spending Medicare Covers The Increased Cost Baseline Spending Source American Medical Association

43 Track 2 ACO Shares In Losses Healthcare Spending Actual Spending Projected Spending ACO Repays Medicare Medicare Covers Small Increases in Cost Baseline Spending Source American Medical Association

44 What Happens After the Initial 3 Year ACO Contract? Healthcare Spending Baseline Spending Projected Spending Actual Spending Medicare Share ACO Share Source American Medical Association

45 Initial Savings Will Be Assumed As the New Baseline Healthcare Spending Projected Spending Based on New Baseline Baseline Spending Actual Spending Source American Medical Association

46 ACO Receives Bonuses/Penalties Based on Costs vs. New Baseline Healthcare Spending Baseline Spending Actual Spending ACO Pays Medicare No Bonus or Penalty Medicare Pays ACO Source American Medical Association

47 Foundation for Shared Savings An ACO shall be eligible for payment of shared savings only if the estimated average per capita Medicare expenditures under the ACO for Medicare FFS beneficiaries for Parts A and B services, adjusted for beneficiary characteristics, are at least the percent specified below the benchmark. The rule proposes a percentage that expenditures must be below the benchmark this percentage is called the minimum savings rate or MSR. A benchmark must be established and updated for each agreement period If an ACO meets the quality performance standards, a percentage of the differences between such estimated average per capita Medicare expenditures in a year, adjusted for beneficiary characteristics, under the ACO and such benchmark for the ACO may be paid to the ACO as shared savings and the remainder of such difference shall be retained by the Medicare program. This is called the sharing rate. The rule establishes limits on the total amount of shared savings that may be paid to an ACO. This is called the sharing cap.

48 Shared Savings Methodology Establish a Benchmark Compare benchmark versus actual costs Compare savings/loss to minimum savings rate If MSR is met, determine the sharing rate based on quality performance scores Apply sharing cap to savings/losses

49 Establishing an Expenditure Benchmark The benchmark is a surrogate measure of what the Medicare FFS Parts A and B expenditures would otherwise have been in the absence of the ACO. CMS proposes to estimate an ACOs benchmark based on Parts A and B expenditures of beneficiaries who would have been assigned to the ACO in each of the 3 years prior to the start of an ACOs agreement period using the ACO participants TINs. CMS would use the claim records of ACO participants to determine a list of beneficiaries who received a plurality of their primary care services from primary care physicians participating in the ACO in each of the prior 3 most recent available years.

50 Establishing an Expenditure Benchmark (cont.) Using the per capita Parts A and B Medicare FFS expenditures for beneficiaries that would have been assigned to the ACO in each of these 3 prior years, CMS will estimate a fixed benchmark that is adjusted for overall growth and beneficiary characteristics, including health status using prospective HCC adjustments. The benchmark would be updated annually during the agreement period based on the absolute growth in national per capita expenditures for Parts A and B services under the original Medicare FFS program.

51 Benchmark Methodology Determine patient population assigned to the ACO Based on plurality of services received from primary care providers participating in the ACO Determine Medicare Part A & B expenditures over prior 3 year period for assigned population that would have been assigned to the ACO Make benchmark adjustments for beneficiary characteristics Demographic factors Diagnosis factors Make adjustments to benchmark DSH and IME payments Geographic factors high cost/low cost region Apply trend factor to benchmark Benchmark calculation date to agreement start date Annual adjustment based on national per capita growth

52 Shared Savings Criteria Minimum Sharing Rate The percentage that expenditures must be below the benchmark to account for normal variation, based upon the number of Medicare FFS beneficiaries assigned to an ACO. Sharing Rate A percentage of the differences between such estimated average per capita Medicare expenditures in a year, adjusted for beneficiary characteristics, the benchmark for the ACO may be paid to the ACO as shared savings and the remainder of such difference shall be retained by the Medicare program. Sharing Cap The limits on the total amount of shared savings that may be paid to an ACO. Shared Losses The amount of costs that exceed an ACOs benchmark. Only applies to 2- sided model.

53 Shared Savings Criteria (cont.) ACO Risk Model Medical Savings Rate 2-Sided Model Flat 2% 1-Sided Model Tiered from 3.9% to 2% Beneficiaries Confidence Interval MSR 5,000 90% 3.9% to 3.6% 6, % to 3.4% 7, % to 3.2% 8, % to 3.1% 9, % to 3% 10,000 3% to 2.7% 15, % to 2.5% 20,000 95% 2.5% to 2.2% 50,000 99% 2.2% to 2% 60,000 2%

54 Track 1 vs Track 2 Track 1: Smaller Share of Savings Minimum savings rate of up to 3.9% for small ACOs Medicare pays ACO up to 50% of savings Savings shared only up to 10% of total costs ACO pays 0% of any cost increases Track 2: Larger Share Savings & Cost Minimum savings rate of 2% for large and small ACOs Medicare pays ACO up to 60% of savings Savings shared up to 15% of total costs ACO pays Medicare up to 60% of cost increases if costs increase more than minimum threshold, but no more than 5-10% of costs

55 WHAT S IN IT FOR PHYSICIANS?

56 $600,000 Majority of Medicare Spending Doesn t Go To Physicians Medicare Expenditures (Millions), 2009 $500,000 $400,000 Administration Other Nursing Care Home Health Prescriptions $300,000 $200,000 Hospitals (41%) $100,000 $0 Physician/ Clinical (21%) Source American Medical Association

57 But Physicians Influence a Majority of Medicare Spending $600,000 Medicare Expenditures (Millions), 2009 $500,000 $400,000 $300,000 $200,000 Administration Other Nursing Care Home Health Prescriptions Hospitals (41%) Physicians Prescribe, Control, or Can Potentially Influence $100,000 $0 Source American Medical Association Physician/ Clinical (21%)

58 Shared Savings Lets Physicians Gain From Reduced Spending $600,000 $500,000 $400,000 $300,000 $200,000 Administration Other Nursing Care Home Health Prescriptions Hospitals (41%) CMS Savings Administration Other Nursing Care Home Health Prescriptions Hospitals $100,000 $0 Source American Medical Association Physician/ Clinical (21%) More $ for Physicians

59 Keys to Shared Savings Total costs for ALL services and procedures to the attributed patients must be lower than projected Total costs don t have to be lower than previous year, however, they have to be lower than CMS projects they would have been for current year Even if savings are achieved for some patients or procedures, if costs increase elsewhere, there may be no net savings to share Savings must be greater than the minimum set by CMS Savings are only attributed to the ACO if the patient received the plurality of their primary care through ACO The shared savings payment comes to the ACO; not all of it may be allocated to physicians, or to the subset of physicians responsible for generating it

60 Minimum Percentage Cost Reduction to Secure Shared Savings in Track 1 Number of Assigned Beneficiaries Minimum Savings Rate 5,000 5, % - 3.6% 6,000 6, % - 3.4% 7,000 7, % - 3.2% 8,000 8, % - 3.1% 9,000 9, % - 3.0% 10,000 14, % - 2.7% 15,000 19, % - 2.5% 20,000 49, % - 2.2% 50,000 59, % - 2,0% 60, %

61 What the Goal Looks Like for 5,000 Patients (~10 PCPs) Current and Projected Spending Year 0 Projected Year 1 Beneficiaries 5,000 5,000 Total Per Beneficiary $10,000 $10,300 Total Medicare Part A & B Spending $50,000,000 $51,500,000 Shared Savings Calculation Minimum Savings Rate 3.9% Minimum Savings Needed $2,008,500 Potential Shared Savings Bonus (50%) Source American Medical Association

62 Large Potential Bonus in Years 2+ If Minimum Savings Achieved Current and Projected Spending Year 0 Projected Year 1 Projected Year 2 Projected Year 3 Beneficiaries 5,000 5,000 5,000 5,000 Total Per Beneficiary $10,000 $10,300 $10,600 $10,900 Total Medicare Part A & B Spending $50,000,000 $51,500,000 $53,000,000 $54,500,000 Shared Savings Calculation Minimum Savings Rate 3.9% 3.9% 3.9% Minimum Savings Needed $2,008,500 $2,067,000 $2,125,500 Potential Shared Savings Bonus (50%) $1,004,250 $1,033,500 Source American Medical Association

63 Physicians Only Different ACO Arrangements, Different Challenges No need to share savings with hospital, but reduced ability to manage hospital-driven costs Physicians & Hospitals Better ability to manage hospital-driven costs, but savings need to be shared with hospital, and hospital could demand most of the savings since most savings will come from reduced hospital revenues

64 Shared Savings Provides No Upfront Financing for Physicians Shared Savings makes no changes in the underlying payment system, so a physician practice or hospital that does fewer billable activities and shifts resources to non-billable activities (e.g., phone calls, hiring nurse care managers to work with chronic disease patients, etc.) will lose money in the short run, and possibly in the long run Shared Savings are not paid until the year after savings are achieved, so even if savings ultimately offset initial losses or costs, there could be cash flow problems Hospitals or health plans have been viewed as essential to ACO formation because most physician groups and IPAs do not have capital reserves to cover short term losses or finance improved infrastructure

65 Advance Payment Program CMS Innovation Center is committing up to $170 million for up to 50 ACOs to help cover upfront costs Only open to two types of ACOs: ACOs that do NOT include inpatient facilities and have less than $50 million in total annual revenue ACOs whose ONLY inpatient facilities are Critical Access Hospitals or lowvolume Rural Hospitals and have <$80 million in total revenue Three-part financial assistance: Upfront fixed payment of $250,000 $36 per assigned beneficiary in the first month $8 per beneficiary per month over two years Assistance is a forgivable loan, not a grant The upfront assistance is deducted from any shared savings bonuses If shared savings is less than advance payment, the balance is forgiven Total for smallest ACO (5,000 members): $1.5 million ($430,000 upfront + $1.1 million over 23 months)

66 Does the Shared Savings Program Force Hospitals To Hire Physicians? Hospitals are not directly eligible for shared savings; savings are only attributed to the ACO if it includes the primary care physicians or specialists who are providing the plurality of primary care services to the patients Even if the hospital reduces readmissions, infections, complications, etc., it would receive no share of savings unless the patients received primary care from the ACO Reducing hospitalizations, ER visits, etc. will reduce the hospital s revenues, but the hospital may receive no share of the savings to help it cover its stranded fixed costs Consequently, hospitals may feel compelled to own physician practices, either to capture a portion of the shared savings revenue, or to prevent there from being any savings!

67 Challenges For Physicians 1. Choosing partners to form the ACO 2. Getting and analyzing utilization and quality data 3. Reinventing care to improve quality and reduce costs 4. Getting commercial payers to provide support 5. Patient compliance

68 Selecting Partners Physicians will need to identify other physicians and potentially hospitals to explore partnerships Physicians will want to know quality/performance of other physicians and hospitals before forming partnerships Including poor quality providers will hurt the ACO s ability to capture shared savings even if costs are reduced ACOs may not just want the best providers as partners; there are opportunities for high-performing providers to partner with low-performing providers, where the high-performer shares expertise, and the lowperformer s improvement generates savings for both

69 Data A major barrier to formation of ACOs is lack of data to understand the total utilization pattern of potentially assigned Medicare beneficiaries: where the savings opportunities are, where the risks of cost increases are CMS will provide data to ACOs, but only after they begin operations Even when they get claims data from Medicare, ACO physicians and hospitals may need technical assistance analyzing claims and their own clinical data to help determine where opportunities are for improvement It s easier to identify opportunities for improvement when you have something to compare to, so community and national analyses of performance of other providers will help

70 Care Improvements Reinventing care processes to improve quality and reduce costs Physician practices will need time and skills to analyze and redesign care processes Improving patient experience will be a much more important factor than ever before, since Patient and Caregiver Experience will be 25% of performance score

71 Support From Commercial Insurers Physicians need all or most payers to support major practice changes, not just Medicare Some states and non-profit Regional Health Improvement Collaboratives are encouraging/facilitating commercial and Medicaid payers to participate in multi-payer payment reforms

72 Patient Compliance Medicare is not giving patients any incentives to cooperate with the ACO s efforts to improve quality and reduce costs; indeed, it will be reminding patients of their right to choice Medicare will be reviewing/restricting the ability of an ACO to market the value of its coordinated services to patients Patient adherence to care plans can be critical to improved outcomes Community organizations could help by educating patients about the value of medical homes, coordinated team care, choosing high-value providers, adhering to care plans, etc.

73 Should You Participate and/or Form an ACO? YES Opportunity to get bonuses for reducing utilization, with no risk of penalty if costs go up (under Track 1 model) Small physician groups can form an ACO while remaining independent through Independent Practice Association and Physician- Hospital Organizations Upfront payment available for physician-led ACOs from Advance Payment Initiative NO Doesn t change the underlying payment system Bonuses only provided if significant savings and quality achieved Patients will be assigned retrospectively based on statistical utilization, not based on patient choice Providers have no control over where patients get care Savings only shared for 3 years, then starting point is reset to zero

74 PARTICIPATION IN AN ACO

75 Participation in an ACO Minimum Requirements Legal entity recognized under relevant state laws Tax identification number The legal entity may or may not be an enrolled Medicare provider and/or supplier Capable of ensuring compliance with ACO laws and rule, quality improvement requirements, and data reporting Capable of receiving and distributing savings Capable of performing all functions outlined in law and rules

76 Participation in an ACO Legal Structure and Governance An ACO s legal structure must provide both the basis for its shared governance as well as the mechanism for it to receive and distribute shared saving payments to ACO participants and providers/suppliers. Legal Entity Governance Governing Body

77 Legal Entity ACO must be constituted as a legal entity appropriately recognized and authorized to conduct its business under applicable State and it must have a tax identification number (TIN). The ACO is not required to be enrolled in the Medicare program, but all participants must have a NPI. A recognized ACO must be capable of: Receiving and distributing shared savings, repaying shared losses, establishing, reporting, and ensuring ACO participant and ACO provider/supplier compliance with program requirements, including the quality performance standards, and performing the other ACO functions identified in statute

78 Legal Entity (cont.) Existing legal entities appropriately recognized under State law are not required to form a separate new entity for the purpose of participation in the Shared Saving Program if the existing legal entity meets the eligibility requirements to be an ACO. If an existing entity wishes to include other providers/suppliers who are not already part of its existing legal structure, a separate legal entity would have to be established. 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.

79 Governance Governance should allow for appropriate proportionate control for ACO participants. The governing body must be capable of defining the processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care. The governing body would be comprised of: ACO participants Medicare beneficiaries Professionals who accept responsibility for the ACOs administrative, fiduciary, and clinical operations. If the ACO is comprised of a self-contained financial and clinically integrated entity that has a pre-existing board of directors or other governing body, they are not required to form a separate governing body as long as the governing body is able to meet all other criteria required for ACO governing bodies.

80 Composition of Governing Board The ACO should be operated and directed by Medicare-enrolled entities that directly provide health care to beneficiaries. ACO participants (physicians) must have at least 75 percent control of the ACOs governing body. Each ACO participant must choose an appropriate representative from within its organization to represent them on the governing body. The ACO must integrate community resources as an essential part of patient centeredness.

81 Leadership and Management Structure The ACO must have in place a leadership and management structure that includes clinical and administrative systems. Dedicated physician leadership Clinical management and oversight managed by a senior-level medical director who is a board-certified physician, licensed in the State in which the ACO operates, and is physically present in that State. ACO must have a physician-directed quality assurance and process improvement committee that would oversee an ongoing quality assurance and improvement program. Operations would be managed by an executive, officer, manager, or general partner, whose appointment and removal are under control of the organization s governing body

82 Leadership and Management Structure (cont.) Health information technology that facilitates the aggregation and analysis of data, allows patient-level feedback, and provides alerts and reminders at the point of care Experience with non-medicare payer initiatives ACO must develop and implement evidence-based medical practice or clinical guidelines ACO would have an infrastructure, such as information technology, that enables the ACO to collect and evaluate data and provide feedback to the ACO providers/suppliers across the entire organization, including providing information to influence care at the point of care via shared clinical decision support, feedback from patient experience of care surveys or other internal or external quality and utilization assessments.

83 Participation in an ACO Agreement Requirements Participation agreements are limited to three years. The ACO acknowledges that it will comply with all the requirements for participation in the Shared Savings program and that all related contracts and arrangements must require compliance with the ACO obligations under the three-year agreement. If an ACO needs to discontinue its participation in the Shared Savings Program prior to the end of the three- year agreement period, the ACO must give CMS 60-days advance written notice and the date of termination. ACOs will be subject to a 25 percent withholding to offset any future losses. If the ACO successfully completes its three-year agreement, CMS will refund, in full, any portion of shared savings withheld that is not needed to offset losses. If the agreement is terminated before completion of the three years, CMS will retain any portion of shared savings withheld. All ACOs, ACO participants, and ACO providers/suppliers with direct or indirect obligations under the program be subject to the requirements of the agreement between the ACO and CMS.

84 Participation in an ACO Number of Beneficiaries ACOs participating in the Medicare Shared Savings program must have at least 5,000 assigned beneficiaries. If the ACO s assigned beneficiary population falls below 5,000 during the course of the agreement period, (3 years) CMS would issue a warning and place the ACO on a corrective action plan. The ACO would still be eligible for shared savings for the performance year for which the warning was issued. The ACO must increase its assigned beneficiary population to 5,000 or greater. If the ACO fails to meet the 5,000 beneficiary threshold by completion of the next performance year, the ACO agreement will be terminated and the ACO will not be eligible to share in savings for that year. CMS reserves the right to review the status of the ACO while on the corrective action plan and terminate the agreement if the ACO no longer meets eligibility requirements.

85 APPLICATION PROCESS

86 Key Dates

87 ACO Application Process First step in applying to be Medicare ACO is submission of a Notice of Intent (NOI): Submitting the NOI web form allows you to get an ACO ID number, which ACOs must have before they can submit an application ACO application information is at: program/37_application.asp

88 ACO Application Process NOI completed by Jan. 6 th for April start NOI must be submitted electronically ACO will get acknowledgment with ACO ID and instructions for completing CMS User ID application Submitting NOI does not require ACO to submit an application for 2012 Without ACO ID and CMS User ID, cannot access Health Plan Management System (HPMS) to complete 2012 application

89 ACO Application Applications must be submitted by Jan. 20 for ACOs to start April 2012 Application package includes: application, electronic funds transfer (form 588), participant list, data use agreement Applications may be submitted via tracked mail or electronically

90 Applying for Advance Payments Participating Advance Payment ACOs will receive three types of payments: An upfront, fixed payment An upfront, variable payment A monthly payment of varying amount depending on the size of the ACO CMS will recoup Advance Payments through an ACO s earned shared savings

91 Applying for Advance Payments Advance Payments only available to ACOs with April or July 2012 start dates For April start date, Advance Payment applications accepted Jan 1 - Feb 1 For July starts, Advance Payment applications accepted Mar 1 - Mar 30 Online application template to be posted: seamless-and-coordinated-care-models/ advancepayment/

92 Resources Centers for Medicare and Medicaid Services American Osteopathic Association Center for Medicare and Medicaid Innovation Medicare Payment Advisory Commission

93 QUESTIONS

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