HEALTH REFORM. August2011

ADVANCING NATIONAL HEALTH REFORM Ap o c y f o m h W I u H h, Ec o o m c&f m ys c u yp o g m POLI CYBRI EF Augu2011 B k gdowb o C gsf yn Ac c ou b C O g z o : F d S u o ydrg u o yi u AM M c V ga P of o U v yofc f o, H g Co g of h L w S or c hf ow UCB k ys c h oo ofl w M h wch y L g F ow UCB k ys c h oo ofl w No hm z R c ha A P dhoh R c ha Th b fw f u d db yg f om B u S h dofc f o F ou d o

EXECUTIVE SUMMARY h mpmo of h P Poco d Affodb C Ac of 2010 ( PPACA ) udwy. A vy o db o Mdc d Mdcd fom o udwy. No co of h PPACA dd boh of h v w co 3022 of h u d popod mpmg guo cocg ccoub c ogzo ( ACO ). Th ffo o pomo w fom of ffcygd hh c dvy d pym pk o wo-fod d o bd h hh c co cuv wh obg b hh c oucom. ACO popo o do boh. Hh c fy- povd w hv much of h wod -vd by h PPACA. Mo mkby, ub umb of uud dvdu ow vd by fy- povd w bcom ud. Th fy commm o vg h udvd w hv o b boh vd d fd gh of h. ACO off fom whch hh c povd d p boh bf fom ymc wd fo povdg b, mo gd c d obg b hh oucom. ACO pmd o h bf h povd d p gd h. Nowh h mo u h h fy, wh h udvd o houd p h bf of hh c fom mph o hgh quy gd hh c. Sfy- povd hv o y b mb commc uc-fudd povd -vg hmv gd hh c dvy ym. Th py bcu vu cp o vb o h povd o mu pg fo h fomo. I o du o cofuo ov g d guoy b o fy ACO fomo. I pcu, ucy bou fd g d guoy b o fy- ACO fomo h cd o povd compo co, f compo w d fd x pocy. Th pocy bf dd ch of h u d mk pcfc fd pocy commdo gd ovg h cofuo uoudg h u. W mk pcfc commdo bou ccommodg h d d mo of fy- povd h g d guoy fmwok fo ACO. Ou og commdo h fd guoy ovg ACO oou m h dmv pob ocd wh compyg wh xg d modfd g d guoy b. Th woud hp o c bhg oom fo fy- povd d oh d fomg ACO. Th mo ffc wy o do h woud b o dvop comphv pogm gud o fy- ACO fomo h cu co ubv guoy. Th pocy bf mk h c fo h ppoch wh dvcg pcfc popo o cfy d cfy g d guoy b o ACO fomo h fy. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu INTRODUCTION ccoub C Ogzo ( ACO ) o of v w fom of hh c povd d dvy gm cd ud h P Poco d Affodb C Ac of 2010 ( PPACA ). Ahough h cocp of ogzg dvy d fc o povd mo co-ffcv hh c o w, 1 h fd govm wdpd pomoo of ACO goudbkg. 2 Th go ohg h o fudmy ucu h wy whch Amc cv hh c vc by cg fc cv h wd quy d oucom of c wh g h gowh co. Accoub c copo boh hh c dvy d hh c pym fom. A ACO b udood goup of hh c povd d uo h cocvy pob fo (d hd ccoub o mu of) h hh of popuo d h h ogzo ucu h coug mpovm quy d ow co hough pym cv. 3 Povd vovd ccoub c mu off c h gd v h my b ufm o h pcc d o h p. Povd h dpd my hv o o coop o povd h gd c. Ad w fom of povd coopo d go vby c o quo od uoy d guoy fmwok dgd fo fgmd ym. Ahough h d h fd govm h cocu guoy uhoy ov hh c, h u of govm-fudd hh uc d much of h povo of hh c wh Cfo fy m of ovppg fd,, couy d oc coc. Mdc pcu xcuvy fdy fudd pogm u h um h hh c oc. Mdc xcuvy fdy fudd bu mo Mdc vc dvy oc d ud by fomo d oh ouc oc, d fd v. 1 Sph M. Sho & Lwc P. Co, Hh C Rfom Rqu Accoub C Sym, 300 JAMA 95, 95-97 (2008) (xpg h by of coodd d ccoub ym o mpov h quy d dc h co of hh c); Mdc Pym Advoy Commo (MdPAC), Impovg Icv h Mdc Pogm (2009), vb hp://www.mdpc.gov/docum/ju09_po.pdf. 2 42 U.S.C.A. 1395cc-4 (W 2010) (c Mdc po pogm o b up ud h w hh fom w o budd pym fo c ppcb codo oud hopzo). 3 Au Fk, Th Dowd of ACO, Th Icd Ecoom, Juy 12, 2010, hp://hcdcoom.com/wodp/h-dowd-of-co. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

2 I o ccd, h, h h C fo Mdc d Mdcd Svc ( CMS ) hv cho o u h f popod ACO guo 4 h Mdc pogm ud ACO pojc cd h Mdc Shd Svg Pogm ( MSSP ). I Mdc, CMS h h fudg, h uzo d d h vg d o moo pogm h mu hh c dg d dvy ucc co my dmo. Mdc v co co of Amc, cudg h mjoy of Amc ov h g of 65 d dbd dvdu wh uffc wok hoy. Sfy- povd vd goup wh commo pupo o povd hh c vc o h udvd. Th hh c fy h o ddzd dfo, gcy of ck of fom ucu. 5 Gy, hough, h fy cud pubc hop d hh ym, hh c dc, commuy hh c d cc d fo-pof d opof hh c ogzo h povd f o dcoud c. 6 Mo pcfcy, h Iu of Mdc h dfd h hh c fy : ho povd h ogz d dv gfc v of hh c d oh d vc o uud, Mdcd, d oh vub p. 7 Hh c fy- povd dguhd by xpc md o mo o v p gd of h by o py d by h fc h ub h of h p mx uud o Mdcd gb. Th m pubc hop ym, fd,, d ocy uppod commuy hh c o cc, pc vc povd, commuy hop, pv phyc, d mbuoy c my f wh h dfo of fy- povd. A of h ouchd om wy by h pom of ACO h fy. Co fy- povd ypcy g Mdcd popuo p of h vc o h udvd, bu my o v ow com Mdc bfc. Idd, Mdc povd pcpo h fy o h. 8 Th pcuy u Cfo u d mdcy ud-vd cou wh ococoomc fco of hh c dvy o pooucd wh d pob o co-co of commuy cv hh c commuy cc. Mdc xpmo of h bwh fo Mdcd 9 d commc uc xpmo. Idd, h MSSP popod guo pcfcy comp h much of wh vuy pomugd fo Mdc ACO my hod u fo Mdcd ACO w ACO h commc uc. 10 Fo h o o, fy- povd d fy- ACO pcpo d o focu o h MSSP pogm d CMS d o focu o h mpco of h MSSP pogm fo fy- povd. 4 Th f guo xpcd o b d y f, 2011. 5 Mg McHugh., Uddg h Sfy N: Ip Quy of C V O How O Df Sfy-N Hop, 66 Mdc C Rch d Rvw 590, 590-604 (Ap 27, 2009), vb hp://mc.gpub.com/co/66/5/590.fu.pdf. 6 Ezbh Svo, Cfo Hhc Foudo, Cfo Sfy-N Cc: A Pm 2 (2009), vb hp://www.chcf.og/~/md/f/pdf/s/pdf%20sfynccpm.pdf. 7 Iu of Mdc. 2000. Amc Hh C Sfy N. Whgo, DC: No Acdmy P. 8 Svo, up o 6. 9 Mdcd fdy fudd bu dmd by h. Cfo vo cd Md-C. 10 Mdc Pogm: Mdc Shd Svg Pogm: Accoub C Ogzo, 76 Fd. Rg. 19,592 (popod Ap 7, 2011) (o b codfd 42 C.F.R. p. 425). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

3 CMS o p wh bod buh co h ACO dcp pwohy fo ckowdgm h ffccy my dmd cocy pogm dg d opo co poduc mk. Howv, h popod guo (d comm ho) h hv mgd do o dfy d pod o h pcfc coc of fy- d fomg ACO. Sfy- povd d ACO fomo mu cofo quo bou pcp gby, fc vby, d cofc bw h p-xg hh c g d guoy fmwok d h gud bg dvopd o hp ACO fomo. Th of pocy bf mp o f h gp. Th bf, h f h, w focu o h fd gv d guoy b o fy- ACO fomo. A cod bf w focu o h gv d guoy b o fy- ACO fomo. Th f pocy bf h w o d xpd o h pojc Sfy-N ACO Rd Ium. A h pocy bf, ogh, dgd o dfy d cfy g d guoy b fd,, couy d oc o ACO fomo h fy. Lg d Rguoy B o ACO Dvopm h Sfy N: A Spho of h P Sco 3022 of h P Poco d Affodb C Ac ( PPACA ) ou w fom of gd hh c dvy d fc dgd o cood c by gg povd, p d py cv fo mpovd, co-ffcv c. ACO p oy fco of h o x of h PPACA, bu hy hv b occupyg much of h gd c dcuo of h PPACA bcu of h pom of w fom of gd c dvy co py d bcu of h pd wh whch h C fo Mdc d Mdcd Svc ( CMS ) popo o o hm ou. 11 O Mch 31, 2011, CMS d popod guo fo h MSSP. 12 I ddo, d p of h -gcy cobov dmv poc, oh ACO-d gud w ud: CMS d HHS Offc of Ipco G (OIG) joy ud oc wh comm pod oug popo fo wv of c Fd w h phyc f-f w, h -kckbck u d c povo of h cv moy py w coco wh h Shd Svg Pogm. 13 Th Fd Td Commo d h Dpm of Juc joy ud Popod Sm of Efocm Pocy Rgdg Accoub C 11 S,.g., NPR, Accoub C Ogzo Expd, Juy 18, 2011, hp://www.p.og/2011/04/01/132937232/ccoub-c-ogzo-xpd. 12 Mdc Pogm; Mdc Shd Svg Pogm: Accoub C Ogzo, 76 Fd. Rg. 19,528, (popod Mch 31, 2011) (o b codfd 42 C.F.R. p. 425). 13 Mdc Pogm; Wv Dg Coco Wh h Mdc Shd Svg Pogm d h Iovo C, 76 Fd. Rg. 19,655 (popod Ap 7, 2011). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

4 Ogzo Pcpg h Mdc Shd Svg Pogm (Au Pocy Sm). 14 Th I Rvu Svc (IRS) ud Noc ( IRS Noc ) qug comm gdg h d fo gudc o pcpo by x-xmp ogzo h Shd Svg Pogm hough ACO. 15 Ev bfo h y Ju co of h comm pod, wo oh Mdc ACO v w oducd by h C fo Mdc d Mdcd Iovo ( CMMI ) h oduco of h Po ACO Pogm 16 d h Advc Pym ACO Mod, 17 boh dgd o bod h oppouy fo vd hh c povd o pcp h dvopm of ACO. Th Po ACO Pogm, pcu, cofmd wh my hd upcd h h hh c dvy mod foud h Mdc Phyc Goup Pcc Dmoo Pojc 18 woud m h qum of Po Pojc ACO pogm pcp. 19 Th w hg w fo ho ookg fo wod xmp of ACO-k ogzo. No of h pcp h Mdc Phyc Goup Pcc Dmoo Pojc w xcuvy fy--focud, howv. Thfo, hough h umkg poc ow udwy, CMS d CMMI hv dy md pog dfyg om of h g d guoy b h my dmp hum fo fy- ACO fomo. W hghgh h dvopm, wh ufu. Bu o fy- ACO g d guoy b hv b compy ovd. Chf mog h fd gv d guoy b o fy- ACO h d of fuh mpfco o cfco. Focug o h pmy fd gv d guoy b o fy- ccoub c fomo d opo, h pocy bf w dd: 20 Povd compo co F compo w Fd x pocy Th u v o fy- povd d ACO fomo. 14 Popod Sm of Au Efocm Pocy Rgdg Accoub C Ogzo Pcpg h Mdc Shd Svg Pogm, 76 Fd. Rg. 21,894 (Fd. Td Comm popod Ap. 19, 2011) [hf Au Pocy Sm]. 15 Noc 2011-20, I Rvu Svc, vb hp://www..gov/pub/-dop/-11-20.pdf. [hf IRS Noc]. 16 Th pogm oucm d ppco fom my b foud hp://ovo.cm.gov/-offocu/m-d-coodd-c-mod/po-co. 17 Th pogm oucm my b foud hp://ovo.cm.gov/-of-focu/m-dcoodd-c-mod/dvc-pym. 18 Mdc Pcpo Dug Impovm d Modzo Ac of 2003, Pub. L. No. 108 173, 117 S. 2066 (2003) (Ebhd Mdc Phyc Goup Pcc). 19 Id. 20 A pocy bf w focu o gv d guoy b o fy- ACO fomo. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

5 Povd compo co mpo bcu hy h quo of whh pcfc fy zo compd h fd fud d bu w op ough oom fo fy- y pcpo ACO fomo d whh fy- w b b o compy wh h fc d ogzo dmd of h fy zo. Smy, f compo w co mpo bcu hy h quo of whh h u fy zo cvd ou fo ACO fomo w b ccb o fy ACO d whh fy- w b b o g h ouc 21, wh cy, o mk h d dv c fo fy zo xmpo. Fy, fd x pocy g o bu ohp bw o-pof hh c d fo pof hh c mpcd by ACO fomo h xd byod covo p d oup g, omhg h w ky b of pcu o w cpzd fy- ACO. Sfy-N ACO Fomo d Opo Rqum Rg o Povd Compo Sfy- ACO my k my fom. Th MSSP popod guo pcfcy dc o m h pob ogzo fom of c ACO. Sfy- ACO my hv o b pcuy pu h dg f h pcpg hv o cuu of gd c co vu. Th mk uddg h ppcby of h fd Sk Lw, 22 A-Kckbck Su, 23 d Cv Moy Py Su 24 o fy ACO fomo d opo mo pg bcu h fud d bu u d guoy chm h w hp hd vg gm yp of ACO. Th pcu vc of povd compo co fo fy- ACO h h fomdb moog d compc bud h MSSP qu my dpopooy bud fy- ACO. Ad wh h co of h pocy bf focu o h mpco of povd compo co o fy- ACO, h pobm g. Much, f o mo, of h bod fud d bu k m ocompc wh h ucu d poc qum of ACO d h ccompyg d pog qum. 25 Ad h qum h o dpopooy bud fy-. Mdc xg fud d bu w ovwhmgy uchgd by h MSSP pogm. Cfuy-od xcpo hv b popod by h Offc of h Ipco G ( OIG ) d CMS o c ough oom d h g pohbo o phyc f-dg o ow w fom of hh c dvy d fc o fouh 21 Th o of md cp d dmv ouc hbg fy- ACO fomo y h cu co vy u dcud h pocy bf. Sfy- povd, opg ow co, my fd v mo dffcu o dmo h v of hd vg qud by ACO pcpo. Ahough h u bf do o pcfcy dd cpzo co, h xc oom ov h dcuo. 22 42 U.S.C.A. 1395 (W 2010). 23 42 U.S.C.A. 1320-7b(b) (W 2010). 24 42 U.S.C.A 1320-7 (W 2010). 25 Kh McDmo, Mdc ACO: Fud d Abu Ppcv, 23, hp://www.mogw.com/dx.cfm/vid/4547863-d721-4408-8f8b- 5543cf66fb/fuco/v.d. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

6 o pmd o povd hg fc k oucom. Wh fud d bu w py v o h Mdc ym, wvg hm fo MSSP pym d oh ccumc, CMS h popod, quy o h ucc of h MSSP. Shd Svg wh h Sfy-N ACO Sk Lw Bhg Room Sk Lw gy pohb phyc o fmy mmb wh fc ohp hh c y fom mkg f o h y fo c Mdcfudd hh vc. Th c by u d om y coc ov ACO fomo. Mo fy povd o poo o bh owhp o fc hh c f cp. Fud d bu w, ovwhmgy dgd o poc h,, u, of vc o fy- povd. I po, OIG d CMS hv popod wv of h Sk Lw g pohbo o phyc f-dg fo h dbuo of hd vg cvd by ACO o h pcp fo cv cy fo d dcy d o h ACO opo. 26 I ddo, Sk Lw dy cud xcpo fo dc compo gm. 27 Pocy Rcommdo: Fuh gudc dd o how o dfy h ACO f-dg wv d h pxg xcpo fo dc compo gm, fo pog qum. CMS d h coopg gc o d o cod h dpopoo bud w fud d bu w pog d compc qum pc o fy- codg ACO fomo. Shd Svg Wh h Sfy-N ACO A-Kckbck Su Bhg Room Th fd -kckbck u pohb kowg pym o oh od o duc f fo Mdc hh vc. Th u o d y quo bou h cop of pmb ACO hd vg pym. I po, OIG d CMS hv popod o wv h A-Kckbck Su pohbo o wdg fg povd by h wv of h u fo y fc ohp bw d mog ACO pcp, povd d upp h cy fo d dcy d o h ACO pogm d h mpc Sk Lw xcpo. 28 26 42 U.S.C.A. 1395 (W 2010). 27 42 C.F.R. 411.35(c)(2). 28 42 U.S.C.A. 1395 (W 2010). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

7 G Shg d Sfy-N ACO Th Cv Moy Py ( CMP ) Su pohbo o g hg p h og d c co o h ACO pm. A bod pohbo o dvdu hg h cd pof of ogzo h h of h Cv Moy Py Su fd Woo ACO dg. Th ACO cocp jc h Cv Moy Py Su fomv umpo h povd wdd fo mpovd bf o h ogzo woud vo Mdc md o povd ob d cy mdc vc. 29 CMS d h OIG hv popod wv of h Cv Moy Py Su g hg povo fo h dbuo of hg vg gd by ACO o og h pym o md o duc mo o mdcy cy vc. 30 I ho, h popod gud mov ccuo of g fom h dfo of Cv Moy Py Su voo, o og h g hg pym o wd compc wh h Mdc u d h quy d pfomc mu qud by h MSSP. Pocy Rcommdo: CMS d OIG houd off fuh cfco o h CMP wv ppcby o povd d upp oud h ACO. Dwg o ouc oud of h ACO my b pcuy mpo fo m, w-cpzd ACO, uch fy- ACO. Phyc Compo Co fo Sfy-N ACO Admv Bud CMS pcfcy ocd comm o h cy of wv fo gm d o ACO fomo, compc wh MSSP guo, o budg IT d dmv cpcy. A wh y g u, fy- ACO w ugg wh cpcy. No oy do h popod guo qum of ddd compc offc 31 poy d fy- povd coff, bu h ddo of w guo h qu ch d dvc coud o m cd fc bud fo h fy. Th popod fud d bu wv dg o xcpo. Thfo, CMS houd cod whh fy- povd houd b pmd o ubu oh pofo, uch g cou o hd of dmo, h compc offc o. Th w b ub g wok o do h y of h pogm. Fo xmp, h ph cy fo d dcy d o w o doub qu po by CMS, OIG d povd hmv bfo wokg dfo mg. I g xmp, fc ohp oh h hd vg pym mu m xg xcpo o h Sk w od o b g ud h popod wv. My uch xcpo x, uch bo fd mpoym ohp, po vc 29 42 U.S.C.A. 1395x(ddd)(1) (W 2010). 30 42 U.S.C.A. 1395x(ddd)(1) (W 2010). 31 42 C.F.R. 425.5(d)(10)()(A). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

8 ohp d dc compo gm. Howv, obg oud g dvc bou h w yp of fc ohp ud h MSSP my qu mo g ouc h fy- povd hv pvouy d. Thu, h chc h p of h popod wv dg, g u k fud d bu my pov o b obc o dcv o fy- ACO fomo. Pocy Rcommdo: CMS houd cod whh c off chc g c, uch CMS o HHS- OGC oy, o fy- povd vgg h fc of h MSSP. Ovvw: F Compo Coc d ACO Th ucc of Mdc ACO v, whh hough h Mdc Shd Svg Pogm o h Po ACO Pogm, w b judgd p by whh hy vov povd goup of yp, o oy g gd goup pcc wh ffd hop o g pcc goup ffd wh g commc u. Moov, hh c povd mo ky o g h c dvy fo Mdc bfc hough ACO f hy c o u h ACO fo commcy ud p. 32 [P]ovd m pupo fomg ACO my o b o chv co vg o b hd wh Mdc bu o gh h mk pow ov puch h pv co. 33 Th ucc of of CMS ACO v houd o b mud by h oppouy hy p o povd, p d py h fy o p h bf of mo fuy-gd hh c. F compo coc v o fy- ACO fomo d opo wo-dmo: coc wh cd povd o u coco hbg fy- ACO fomo o opo, d coc wh fyg ACO f compo qum fo fy- ACO fomo. Povd d Iu Coco Iu h Sfy N: Th Pobm of Acc o Spc Sfy- povd ypcy o movd by h dv o gh h mk pow ov puch h pv co. Thy w, howv, u h k of fu o b compv cgy cocd mk fo pc. If fy povd um ACO go pubcy pood hh c dvy ym h comb[] pmy c b bu oud commuy hh c wh fy- 32 Fd. Td Comm & Dp of Hh d Hum Sv., Wokhop Rgdg Accoub C Ogzo, d Impco Rgdg Au, Phyc Sf-Rf, A-Kckbck, d Cv Moy Py (CMP) Lw (Oc. 5, 2010). 33 Ck C. Hvghu &Bk D. Rchm, Th Povd Moopoy Pobm Hh C, 89 OR. L. REV. 847, 872 (2011). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

9 hop d h pc h v hm, 34 h pc w d o py mjo o fy- ACO fomo. Th vby of pc fo fy- ACO pcpo my b dmhd by h gowg fzy of mg vovg hop, cc d doco goup g o h co d vg, d ch o h cv. 35 Equy mkb, hough od, h c p of u d hop cquo of phyc goup. 36 W h md of wh h b bd po-fom mg wv. 37 Bu wh opm fo commc uc comp d hop my b f fom opm fo ACO h fy. Iuc comp d hop puug doco po o cg fc pu o coo co. O wy o coo co o mp o coo phyc hough h mpoym ohp. 38 Whv h m of uch ppoch fo commc u d hop, c fy- ACO w d cc o obu o of pc dy, wg d b o pcp fy- ACO hough h h MSSP o h Po Pogm. G c h b gv h Popod Sm of Au Efocm Pocy Rgdg Accoub C Ogzo Pcpg h Mdc Shd Svg Pogm Au Pocy Sm o m h fy zo 39 of dpd ACO pcp (uch phyc goup pcc) o combd h of 30 pc o of ch commo vc ch Pmy Svc A. 40 Howv, h ccuo of h ACO h of vc, oud h docum Appdx, o h dfco of Pmy Svc A bd o opcv ZIP cod d. Th PSA bckwd ookg mhod. I u ohg bou h wg of mpo goup, k pcy phyc, o pcp Mdc gog fowd d whh ho coug o pcp Mdc wg o v fy- popuo. A umb of Cfo pcy phyc, fo xmp, ccp Mdc oy wh h uppm of ub Mdc p u f, 41 qum uky o mk hm ccb o h fy p popuo. CMS houd cou h po obc wh wd d/o cv fo pc who pcp ACO wh fy- povd. 34 Joh Zwf., Cg Effcv d Effc Pubcy Spood Hh C Dvy Sym, 22 J. HEALTH CARE POOR UNDERSERVED 311, 316 (2011). 35 Hvghu & Rchm, up o 31, 850.7, cg Rob P, Coum Rk Fd Hh Lw Spu Mg, N.Y. TIMES, Nov. 20, 2010, vb hp://www.ym.com/2010/11/21/hh/pocy/21hh.hm. 36 Choph Wv, Mgd C E h Exm Room Iu Buy Doco Goup, K Hh Nw, Juy 1, 2011, hp://www.khhw.og/so/2011/juy/01/udhh-u-buy-docogoup.px. 37 Tm Gy, Accoub C Ogzo d Au: A Nw PSA T (Ap 1, 2011); vb hp://www.hhfomwch.com/2011/04/01/-w-p-. 38 A phyc mpoym ohp mu o compy wh fd fud d bu u w. 39 Spc dom povd u mg xcuv coc my uppy om f pcy phyc vd. A ACO wh pcp hodg g h 50 pc h gv PSA fo y vc h o oh ACO pcp povd o p h PSA, qu h h dom povd mu b o-xcuv o h ACO o f wh h fy zo. Th o-xcuvy u do o ppy oud h fy zo. 40 Au Pocy Sm, up o 13. 41 Choph Wv, A Mdc Py Shk, Som Cfo Doc Hk P F (Mch 16, 2010), hp://www.p.og/bog/hh/2010/03/cf_h_doc_hk_p.hm. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

10 Pocy Rcommdo: Nohg do o bh h pogm houd wo p-xg pobm wh fy- Mdc povd pcpo. Thfo w commd cv d/o wd fo pc who cobo wh fy- povd. W o commd h cm of u h xcud Mdc povd who qu uppm u f fom h ccuo of vb pc by uho pfomg f compo y. Sfy-N ACO d Compc wh F Compo Lw F compo w poc compo, o compo. 42 A pcc m, h m h f compo w off o fvod m o pcu compo h hh c mkpc. Th pm of f compo w h coum wf mxmzd hough f d op compo. Th u hh c mk wh, hough hh c mk ckowdgd o b mpfc. 43 Th pcuy o wh gd o h pc of fomo ymm o hd-py py h mk dffcu fo om coum o choo bw compg hh c povd. Th h, u, gow up pczd body of f compo w h of hh c ckowdgg h xc of fomo ymm d h gfc o of hd py py. Sc h of owd mgd c, mu- hh uc fm d g phyc pcc goup, fd f compo w h focud o h mou of povd d py coco owd gd c d fc dvy mod. 44 Th Ud S Dpm of Juc d h Fd Td Commo, xcg h cocu uhoy ov fd f compo w h hh c, coopd o u jo Sm of Au Auhoy Hh C 45 1996. Gud Egh, o Phyc Nwok Jo Vu, h b of pcu o ho dvopg f compo w gudc fo ACO. Gud Egh po h b ubjc of codb dpu boh dvoy opo d focm co. 46 Ahough h b c h ccy gd povd my b pocd fom f compo w focm co, h w ucy bou h cop of h poco o povd ogzg ACO. 47 42 S gy, Rob Bok, Th Au Pdox (1993). 43 S gy, FTC d DOJ, Impovg Hh C: A Do of Compo (2004), vb hp://www.fc.gov/po/hhc/040723hhcp.pdf. 44 FTC d DOJ, Sm of Au Efocm Pocy Hhc, 75 (1996), vb hp://www.juc.gov//pubc/gud/0000.hm [hf Gud Egh]. 45 Id. 46 S,.g., FTC Fom Commo Aco gdg Bow d Tod Mdc Goup, vb hp://www.fc.gov/o/2003/07/cdmcmp.pdf, FTC Advoy Opo gdg MdSouh, vb hp://www.fc.gov/bc/dop/mdouh.hm d vb hp://www.fc.gov/bc/dop/070618mdouh.pdf ( ubqu foow-up o MdSouh). 47 Au Efocm h Hh C Iduy: Hg Bfo h Subcomm. O Cou d Compo Pocy d h H. Comm. o h Judcy, 111h Cog. (2010) (m of Rchd A. F, Dco of h Buu of Compo h FTC), vb hp://www.fc.gov/o/moy/101201uhhc.pdf. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

11 Rpodg o h ucy, h Fd Td Commo d h Au Dvo of h Dpm of Juc ( h gc ) ud h Au Pocy Sm gdg ACO pcpg h MSSP o Mch 31, 2011. 48 Th Au Pocy Sm bu o h Gud bu off pcfc gudc v o ACO. I pcu, h Au Pocy Sm dc h compg hh c povd kg o fom gd c ogzo w b vud ud f compo w u of o y. Th woud ppy f h povd fcy o ccy gd d f h jo gm oby cy o ccomph h pocompv bf of h go. Ru of o y g, dd o vu whh coboo ky o hv ub compv ffc, d f o, whh h po pocompv ffcc ky o ouwgh ho ffc. Th g h ky compv ffc, h g o mo ky h ffcc mu b o p mu ud f compo w. Ahough h oucm of g dd of vw fo ACO c bhg d gowg oom fo c ACO, h uc o ufu o ho kg o uch ACO h oucm of ACO f compo focm fy zo. Sfy zo, by h vy u, off popcv gud o pmb cvy d p h mo co ffcv d popcv gudc o how o ogz ACO h w o offd fd f compo w. Th Au Pocy Sm u fy zo dgd fo ACO h m CMS gby c o pcp h MSSP d hghy uky o gfc compv coc. Th gc w o chg ACO h f wh h fy zo, b xody ccumc. Th ACO f compo fy zo cud: Povd goup, uch phyc goup pcc, h povd h m vc 49, o og hy hv combd h of 30% o of ch commo vc ch pcp pmy vc, u hy u. 50 Hop o mbuoy ugy c h o-xcuv pcp ACO 48 Au Pocy Sm, up o 13. 49 Id. 21,898, up o 13 ( Fo xmp, f wo phyc goup pcc fom ACO d ch cud cdoog d ocoog, cdoogy d ocoogy woud b commo vc. If, o h oh hd, o phyc goup pcc co oy of cdoog d h oh oy of ocoog, h h o commo vc d h ACO f wh h fy zo gd of h, ubjc o h dom povd mo. ). 50 Au Pocy Sm, up o 13. 21,897 (df h u xcpo owg ACO o cud o phyc p pcy fom ch u couy ( dfd by h U.S. Cu Buu) o o-xcuv b d qufy fo h fy zo, v f h cuo of h phyc cu h ACO' h of y commo vc o xcd 30 pc y ACO pcp' PSA fo h vc. Lkw, ACO my cud Ru Hop o o-xcuv b d qufy fo h fy zo, v f h cuo of Ru Hop cu h ACO' h of y commo vc o xcd 30 pc y ACO pcp' PSA fo h vc. ). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

12 I ddo, dom povd ho wh g h 50% mk h h PSA of y vc mu b o-xcuv o ACO o f wh h f compo fy zo. Th mpco of h gud d fy zo g o povd coco dff fo commc d fo fy- ACO. Mo fy- povd p do o ppoch h z d c of dom povd. Ad h pcfc xmpo fo h gow o h g mk h oc ACO bhd. 51 Ru fy- povd my ppoch h 50% dom povd dfo d w d o ccumu uffc d o dm, hhod m, whh h hhod h b m d whh o-xcuvy y fx. Th o mp m, howv, my pubc hh cc do o coc h p og d dd o ccu mk h. Gg p og d fom xg p f o bg cod my b pob oy codb vm of m d moy, oc g hghghg h ub bud h dmv qum of ACO my pc o fy povd. Pocy Rcommdo: Th FTC d DOJ houd cod cg pc f compo fy zo fo ACO u. Evyhg bou h fomo qum d og o h of u hh c f h bf of fy- ACO o b vb o h cz, povd d py u. Spcfcy, xpdg h f compo fy zo fo fy- ACO woud pcuy v h o pcp. Sfy-N ACO d Compc wh h Fd Tx Cod Tx-xmp uo h jo fy- ACO my d o cfuy ucu h pcpo o m x-xmp u. A good c c b md h ccoub c go of fomg hh c w qu cvy pg boh h pubc d pv hh c co whch w u commgg of ogzo of dv x u. 52 Addoy, fy- ACO hmv my o my o b x xmp; h I Rvu Svc ( IRS ) h o b c o h po. Th Tx Su of Boh ACO d Cou Tx-Exmp Pcp Th PPACA o h x u of ACO. I ddo, h IRS h o dcy ddd h x u of ACO. ACO, by u of dbug hd vg o phyc, coud poy b h pv bf vhc, omhg 501(c)(3) opof ogzo mu k p o vod. Fuh, phyc mpoyd by hh 51 Au Pocy Sm, up o 13, 21,897. 52 Rob Wood Joho Foudo CMS MSSP Comm, Ju 6, 2011, 4, hp://www.wjf.og/f/ch/72485co201106.pdf. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

13 ogzo my b codd d d ubjc h ogzo o h mpco vod h pohbo o pv um, jopdzg o-pof u. 53 Ahough h IRS Noc dd pv um d pv bf wh gd o h cou ogzo, o how uch u woud wok fo h ACO f. Pocy Rcommdo: Som ACO, uch fy- ACO, u cdd fo x xmpo. Th IRS houd povd pcfc gudc o h po. Tx-Exmp Hh C Iuo Mu Avod Pv Ium d Pv Bf o M Th Exmpo A x-xmp uo pcpo fy- ACO pmd o h cp of hd vg, coo of ACO ogzo. Th m hd vg, howv, coud mp h xmp uo pf x m f h hd vg dbud wy h c pv um o bf o pv p. Th pcp h dvopd ov og d od hoy of fd x-xmp u fo om hh c povd d uo. Acpg h pobm, h IRS ud Noc 2011-20, p of h MSSP ACO fomo gud. I h IRS Noc, h IRS pcf h qum ud whch xpc h w o cod x-xmp ogzo pcpo h MSSP hough ACO o u um o mpmb pv bf o h pv py : 54 Th m of h x-xmp ogzo pcpo h MSSP hough h ACO (cudg h of MSSP pym o o d xp) foh dvc w gm god m gh CMS h ccpd h ACO o, d h o md h ACO fom, h MSSP Th x-xmp ogzo h of coomc bf dvd fom h ACO (cudg h of MSSP pym) popoo o h bf o cobuo h x-xmp ogzo povd o h ACO. If h xxmp ogzo cv owhp h ACO, h owhp cvd popoo d qu vu o cp cobuo o h ACO d ACO u of cp, oco d dbuo md popoo o owhp Th x-xmp ogzo' h of h ACO' o (cudg h of MSSP o) do o xcd h h of ACO coomc bf o whch h x-xmp ogzo d 53 T. Rg. 53.4958-3. 54 IRS Noc, up o 14. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

14 A coc d co d o by h x-xmp ogzo wh h ACO d h ACO pcp, d by h ACO wh h ACO pcp d y oh p, f mk vu 55 Th u ppcb o fy- ACO o ho oud h fy. Thu, wh h IRS Noc gv pcfc gudc, op ho of bk f hbo fo x-xmp uo, d fvog c-by-c dmo, bd o h fc d ccumc. 56 ACO fomd by fy- hop my hv pcu d o c phyc wh bow-mk-co bf uch coc hh cod g, dmv c d bov-mk- y o comp fo cpd o o pcc vu. 57 I my o b dffcu o foh h cu pym o o dvc. Rh, ACO my b md o g foh h mhodoog dvc, dpdg o h vg chvd, o g cv popy fo mxmum vg. Pocy Rcommdo: Sfy- ACO fc uquy dffcu popooy dmo bcu hy ky o cpz hmv wh g, mkg c how o oc hd vg popy. Fuh, h qum my go byod CMS Noc of Popod Rumkg, h qu hd vg of o popooy. Th IRS houd cfy wh h popooy dmo qu of ho bckd o by vu cp bu by foudo g moy o govm fud. A pvouy d, wh h popod guo MSSP pym w b dbud o p popoo o vg zd, h IRS ugg uch pym b dbud o cp owhp h ACO, dff ppoch. Th IRS houd cod vg h qum y, o h v, cfy how w op dm wh h qum h f MSSP guo. Jo Vu Ncy o Fom ACO Coud Imp Tx-Exmp Pcp Exmpo ACO fomd ou of jo vu my bg ogh o-pof d fo-pof. 58 A o-pof hop, fo xmp, my jo vu wh g fo- 55 Id. 7-8. 56 IRS Noc, up o 14, 7. 57 Phyc cum pcc o h coc of h fud d bu w. 58 42 U.S.C.A. 1899(b)(1) (W 2010) (Th o h oy wy o fom ACO. Th ACA mdd 1899 of h Soc Scuy Ac o cud xmp of how hd govc ACO mgh wok: (1) ACO pofo goup pcc gm; (2) wok of dvdu pcc of ACO pofo; (3) php o jo vu gm bw hop d ACO pofo; (4) hop mpoyg ACO pofo; d (5) uch oh goup of povd of vc upp h Scy dm ppop). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

15 pof pco goup o wh fo-pof kd ug fcy o cood c co vu. Such jo vu, f mpopy pd, coud ffc h x xmpo of h o-pof y. A dcd bov, h IRS m fc d ccumc of uch vu, whch coo d o b qu mpo. Th IRS Noc f k ppy cofcg poo. I po o Rv. Ru. 98-15 vd pcd (bhg h fc d ccumc vgo w cy o dm f x-xmp uo d uffc coo jo vu wh fo-pof y). Howv, h IRS Noc o c Rv. Ru. 2004-51 vd (bhg h qu vog coo jo vu bw fo-pof d opof y my b ccpb, povdd c fgud x h govg docum o ky chb fuco by h o-pof y). I pob o d h coy o m h h fom coo u my o b bou qum fo ACO. Som po o h IRS Noc po o codco bw h IRS gud gdg jo vu d h PPACA d h ubqu popod MSSP guo. 59 Spcfcy, h PPACA qu h ACO gov hmv wh popoo po fom pcpg povd. 60 By co, h IRS h doy qud h x-xmp uo o coo. Howv, o c h h wo c uy compb. Fo xmp, jo vu bw opof hop d kd ug fcy, h hop my ghy vog coo, pcuy f povd h mjoy of c hough xg wok of phyc d cu c fc. My o-pof hop h good cdd o fom ACO dy op oup cc w, pcuy mog fy- povd. Ev h v of v p of bod vo mog fo-pof d o-pof, h foudg docum coud b w o dd wh hpp h v of o o fvo h o-pof y fo c ky chb m. Avy, h x-xmp hop coud poy k o poby fo c xmp fuco, Rv. Ru. 2004-51, d v h o h bod. Th govg uo poy bcom much mo compx wh o-pof hop o cc cobo wh mup fo-pof, uch phyc goup d kd ug c. If govc w hd 40% fo h hop d 30% ch fo h oh wo, uch jo vu coud cofc wh h coo qum h h xmp y woud o mjoy. Th u o ky o b pobm fo 59 S,.g., AHCA comm o Noc 2011-20, 2, obd by mg oc.comm@cou..gov. 60 42 U.S.C.A. 1395jjj(b)(1) (W 2010) (ACO pcp mu bh[] mchm fo hd govc. ). W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

16 fy- ACO fomd fom pvouy gd hh c ogzo. I hd o, howv, how fy- ACO coud g wh kd ug fcy whou cofog h u. Roughy hf of ug hom h Ud S fopof fc 61 d om, uch Cfo, hv vy fw o-pof ug hom. 62 Pocy Rcommdo: Th IRS houd povd g cy o how x-xmp uo c vod pv um d pv bf o m h xmpo. Th u, of cou, g h ACO, bu of pg mpoc o x-xmp who w d o fom ohp wh commc hh uc od o fom fy- ACO. 61 CMS Nug Hom D Compdum (2009) Tb 1.2.B, 22, hp://www.cm.gov/cfcodcompc/dowod/ughomdcompdum_508.pdf. 62 Id. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

17 CONCLUSION O mu of h ucc of h PPACA w b how w mpov mo co-ffcv hh c oucom fo dv goup of Amc by h pomoo of gd c co vu. Th w o b o of h PPACA g chg. Ju hh c fgmd, hh c fc o fgmd. ACO dgd o g boh h dvy of d h pym fo c wy h cogz h h c b gd uccfuy whou h oh. Ou hh c fy fgmd h of ou hh c ym. Ad chf ouc of fudg fo p c, mbum fo govm fudd hh uc cp, o fgmd. Th dco o uch fy- ACO, u, o mp o. Th compx of h g d guoy b vovd fcd h gh of h MSSP popod guo d h voum of dcuo d db uoudg h guoy poc. My of h chg vovd ACO fomo qu fom o fy ogzo. Bu my oh w qu cobov ffo bw d mog h govm h gu hh c. I g of gfc fogh h, u, CMS h d upcdd co-gcy coboo h guoy poc o uh h MSSP. Adopo of y of h pocy commdo h pocy bf w my qu co-gcy coboo. Sfy- povd w d o mh h dmv d fc ouc wy o fom ACO. Th mk h mo mpo o dd h d fo md, od poc fo compyg wh h MSSP f compo, fud d bu d fd x coc. Advc v o fy- d ACO fomo foud cd houghou h cobov popod guo d pocy gud u fo h MSSP. Sfy-, pcuy ho wh fw dmv ouc, coud m h f MSSP guo mo y f h g d guoy gudc w povdd focud, comphv fom gd o fy- ACO fomo. Such od, md gudc gd o ACO fomo h fy, pd o comphv docum (co-fcg oh, dd) woud do much o dvc h go of cougg ACO fomo h fy. W Iu Hh, Ecoomc & Fmy Scuy Pogm Bkg Dow B o Cg Sfy-N Accoub C Ogzo: Fd Suoy d Rguoy Iu

Uvy of Cfo, Bky Schoo of Lw 2850 Tgph Avu, Su 500 Bky, CA 94705-7220 510.642.8527 www.w.bky.du/w.hm W Iu Hh, Ecoomc & Fmy Scuy Pogm Th Chf Juc E W Iu o Lw d Soc Pocy mudcpy, cobov vu o poduc ch, ch-bd pocy pcpo, d cucu ovo o h mo chgg cv gh, duco, cm juc, fmy d coomc cuy, mmgo d hhc u fcg Cfo d h No. Ackowdgm Th ch cumg h bf w fudd by Bu Shd Foudo of Cfo. W hk hm fo h uppo. W o hk Sv Sho of h UC Bky Schoo of Pubc Hh d Tm Gy of h S. Lou Uvy, Schoo of Lw fo vwg df of h docum. Fy, hk o Phy Mz fo h hp do y d ufggg pc wh mup df. A M Mc w So Rch Fow h W Iu Hh, Ecoomc & Fmy Scuy Pogm h UC Bky Schoo of Lw, d ow vg A Pofo h Uvy of Cfo, Hg Cog of h Lw. Mhw Chy Lg Fow UC Bky Schoo of Lw Noh Mz Rch A A Pdhoh Rch A