Accountable Care Organization Final Rule Briefing. November 7, 2011

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1 Accountable Care Organization Final Rule Briefing November 7, 2011

2 Health Care Reform: Health Care Delivery Reforms GOALS: Controlling Cost Growth Improving Quality/Outcomes Changing Incentives Coordinating Care 2

3 75% of Medicare Beneficiaries are in Fee-For Service Today Hospitals (IPPS) Physician Physician Physician Hospitals (OPPS) Physician Physician Physician CMS Ambulatory Surgical Centers Physician Physician Home Health Agencies Skilled Nursing Facilities Physician 3

4 CMS ACO Implementation A Multi-Department/Agency Effort Final Rule Medicare Shared Savings Program: ACO CMS/OIG Interim Final Rule with Comment Waivers for ACO/Shared Savings Program FTC/DOJ Final Statement of Antitrust Enforcement Policy IRS Fact Sheet Confirming IRS Guidance re: ACO Shared Savings Program/Tax Exempt Organizations 4

5 Accountable Care Organizations (ACOs) What? An organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are assigned to it When? 2012 implementation (April 1 st and July 1 st ) Original CBO Estimated Medicare Savings $4.9 billion Medicare Savings/10 years CMS Median Estimated Net Medicare Savings $470 million in net Medicare saving/ 4 years (CY 2012-CY2015) CMS Estimated ACO Take-Up and Assignment Medicare ACOs participating in first four years (CY ) 1 to 5 million Medicare beneficiaries CMS Median Estimated ACO Payments/Costs (CY 2012-CY2015) $1.31 billion in shared savings payments $0 in shared losses $451 million in start-up and continued investment costs Yields an estimated additional $859 million in revenues to ACOs 5

6 ACOs--Basic Structure A voluntary program with 3-year commitment Primary care focus Spending targets/benchmark-- to encourage spending reductions Shared Savings --if below targets and meet quality standards Eligible Entities Group practices Networks Acute Care hospitals employing physicians Partnerships/Joint Ventures **Federal Health Centers (FQHCs and RHCs) Minimum Size--5,000 Medicare beneficiaries 6

7 3 ACO Models Advanced Payment Model ACO/ Shared Savings Program Pioneer Model 7

8 3 ACO Models Mandated ACO/Shared Savings Program One-sided Model Two-sided model Related Initiatives thru Innovation Center (CMMI) Pioneer Model Faster pathway for mature ACOs Existing organizations structured to provide coordinated, integrated care Advanced Payment Model For organizations that need additional access to capital to become an ACO Funding based on expected future savings 8

9 ACOs--Medicare Patients Preliminary Prospective Medicare Beneficiary Assignment to ACOs At the beginning of each performance year and updated quarterly Step 1: Based on plurality of Medicare allowed charges for primary care services provided by general practice, family practice, internal medicine and geriatric medicine physicians or Step 2: A plurality of primary care services from other specialist physicians (e.g. cardiologists, etc.) and certain non-physician practitioners (e.g. PAs, NPs) within the ACO Assignment under Step 2 is made only for beneficiaries who received no primary care service from any primary care physician (including non-aco primary care physicians) Final Retrospective Medicare Beneficiary Assignment to ACOs At the end of each performance year Based on two-step process Medicare fee-for-service beneficiaries may continue to receive care from any Medicare provider they choose If a beneficiary has received the plurality of her primary care from ACO practitioners, she will be included in the ACO unless she proactively moves to other practitioners not affiliated with an ACO 9

10 ACOs Informing Medicare Patients ACO participants (providers and suppliers) must notify patients and post signs indicating that they are participating in the Shared Savings Program (SSP) ACO participants must make available written standardized notices regarding their participation in settings where beneficiaries receive primary care services. ACOs may also provide advance notice to beneficiaries on their prospective assignment list regarding their participation in the SSP ACO marketing materials can be used 5 business days after filing with CMS if not disapproved 10

11 ACOs--Two Tracks Track 1 One-Sided Model ACOs share in savings No penalty for losses Track 2 Two-Sided Model ACOs share in savings AND losses Same eligibility requirements and quality performance standards for both models 11

12 ACOs - Two Tracks Proposed Rule Track 1 - One-Sided Model Final Rule Regular fee-for-service payments for physicians and hospitals Same No penalty for losses in YR 1 and YR 2 No penalty for losses in YR 1, YR 2, and YR 3 ACOs share in losses YR 3 Only in future contracts Proposed Rule Regular fee-for-service payments for physicians and hospitals ACOs share in saving AND losses all 3 YRs Greater opportunity for reward Track 2 - Two-Sided Model Final Rule Same Same Same 12

13 Calculating Shared Savings or Losses Compare Actual Spending by the ACO with its Benchmark to Determine if there are Savings or Losses If Savings: First determine if ACO qualifies: If savings are at or above certain thresholds If minimum quality standards are met Then determine how much and what portion ACO shares If Losses (applicable for ACOs in Track 2): First determine if losses are at or above certain thresholds If so, determine how much and what portion ACO shares 13 13

14 Establishing Each ACO s Year 1 Expenditure Benchmark CMS will calculate per capita Part A and Part B expenditures of beneficiaries who would have been assigned to the ACO for each of the 3 most recent available years prior to the start of an ACO s agreement period For each ACO, data are then risk adjusted (by CMS-HCC) The risk-adjusted per capita amounts are then trended forward using national growth rates in per capita Part A and B expenditures NEW Adjustments/Calculations Remove Indirect Medical Education (IME) and DSH payments Separate calculations for ESRD, disabled, Aged dual eligible, and Aged nondual eligible 14

15 Updating the Benchmark for Each Performance Year Updated by projected absolute amount of growth in national per capita Parts A and B expenditures New Benchmark Adjustments For newly assigned participants--risk adjusted using CMS-HCC For continuously assigned Medicare participants Risk adjusted using demographic factors and CMS-HCC (only downward adjustments) Note: Special payment adjustments for Indirect Medical Education (IME) and DSH paid to hospitals directly 15

16 ACO Shared Savings One-Sided Model Design Element One-Sided Model Minimum Savings Rate (MSR) 2%-3.9% of ACO s benchmark Net Savings Rate First dollar (had been savings above 2%) Maximum Uncapped Quality-Dependent Shared Savings Up to 50% of Savings Maximum Shared Savings 10% of ACO s benchmark (had been 7.5%) Withhold of Savings for Future Losses Shared Losses No withhold (dropped 25% req.) No longer applicable for initial 3-year agreement 16

17 ACO Shared Savings/Losses Two-Sided Model Design Element Two-Sided Model Minimum Savings or Loss Rate 2% of an ACO s benchmark Net Savings Rate First dollar (had been savings above 2%) Maximum Uncapped Quality-Dependent Shared Savings Up to 60% of Savings Maximum Shared Savings 15% of ACO s benchmark (had been 10%) Withhold of Savings for Future Losses Maximum Shared Losses No withhold (dropped 25% req.) Up to 60% of Losses Additional Cap on Losses Year 1 5% of benchmark Year 2 7.5% of benchmark Year 3 10% of benchmark 17

18 Quality Performance Measure Scoring PROPOSED 65 measures spanning 5 quality domains, with each domain weighted equally ACOs must score above the minimum attainment level on all measures within a domain to be eligible for shared savings Quality performance requirements for all domains must be met to share savings Year 1 ACOs required to report on quality. Shared savings payments would be based on complete and accurate reporting. Year 2 Pay-for-performance applies to all measures Year 3 Pay-for-performance applies to all measures FINAL 33 measures spanning 4 quality domains, with each domain weighted equally ACOs must achieve the minimum attainment level on at least 70% of the measures in each domain to avoid facing corrective action Same Year 1 Pay-for-reporting for all 33 measures Year 2 Pay-for-performance applies to 25 measures; pay-for-reporting applies to eight measures Year 3 Pay-for-performance applies to 32 measures; pay-for-reporting applies to one measure 18

19 Questions? 19

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