Accountable Care Organizations

Accountable Care Organizations

As a starting point let’s look at the recent rules published by HHS, Department of Health and Human Services, who is charged in the Affordable Care Act (ACA), to develop the rules related to the start up, qualifications and operations of Accountable Care Organizations (ACOs). The following is the HHS preliminary questions and answers for ACOs from the CMS Office of Legislation.

Medicare “Accountable Care Organizations”

Shared Savings Program – New Section 1899 of Title XVIII

Preliminary Questions & Answers

CMS/Office of Legislation

The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). ACOs facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. This document provides an overview of ACOs and the Medicare Shared Savings Program.

Q: What is an “accountable care organization”?

A: An Accountable Care Organization, also called an “ACO” for short, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.

For ACO purposes, “assigned” means those beneficiaries for whom the professionals in the ACO provide the bulk of primary care services. Assignment will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.

Q: What forms of organizations may become an ACO?

A: The statute specifies the following:

1. Physicians and other professionals in group practices
2. Physicians and other professionals in networks of practices
3. Partnerships or joint venture arrangements between hospitals and physicians/professionals
4. Hospitals employing physicians/professionals
5. Other forms that the Secretary of Health and Human Services may determine appropriate.

Q: What are the types of requirements that such an organization will have to meet to participate?

A: The statute specifies the following:

1. Have a formal legal structure to receive and distribute shared savings
2. Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
3. Agree to participate in the program for not less than a 3-year period
4. Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
5. Have a leadership and management structure that includes clinical and administrative systems
6. Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
7. Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.

Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall.

Q: How would such an organization qualify for shared savings?

A: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of per-beneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Q: What are the quality performance standards?

A: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Q: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

A: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Q: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

A: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.

Q: When will this program begin?

A: We plan to establish the program by January 1, 2012. Agreements will begin for performance periods, to be at least three years, on or after that date.

Q: How do I get more specific information?

A: CMS plans to hold a listening session to hear stakeholder ideas on ACOs this summer. Further details about this listening session, to be held as a special open door forum, will be posted by June 11 on the following special open door forum website:

http://www.cms.gov/OpenDoorForums/05_ODF_SpecialODF.asp#TopOfPage
Further details for the shared savings program will be provided in a Notice of Proposed Rulemaking which CMS expects to publish this fall
To summarize; an ACO is a provider organization that contracts with Medicare for a minimum of 3 years, contains primary care physicians, has a minimum of 5,000 patients in these primary care practices who are not currently enrolled in Medicare Advantage Plans, but are Medicare direct members, has the legal structure to divide the shared savings payments, has access to sophisticated systems to report quality services to Medicare, and will share in the savings from patient centric care provided to these patients, based on benchmarks of costs for these members determined by Medicare. In return the providers will share at some as yet undetermined percentage of the savings from previous costs for these members. There is no downside, if the costs come in higher than the benchmark. Additionally, the ACO is to guide care, but the members can go to any physicians they desire, the program puts no limitations on them and is to be invisible to them.

This is what we know so far. There are many parts of this program that are as yet undefined. What we don’t know is how well is the ACO going to be compensated for the administrative services it will be required to perform (purchase of EMR/E-prescribing/quality reporting software); are all provider types (PCPs, specialists, hospitals, ancillary Part A&B providers) required to be in the ACO to qualify as an ACO; what percentage of the savings are we talking about? How do the ACO providers going to guide the patients to the providers in the ACO? Do the providers continue billing the Medicare intermediary for payment? Will the rates remain the same? What about shorting the length of hospital stays under DRG reimbursement? How long does the ACO have to put the technical components (EMR/E-prescribing/quality reporting) in place? What happens when an ACO member joins a Medicare Advantage Plan, are they removed from the ACO membership? Are the shared savings settlements only on an annual basis? How will the benchmarks be determined, will it include escalators for inflation? What happens to late claims submissions from ACO and non-ACO providers in the settlements? What happens to provider’s members when the provider dies, moves out of state, or just changes practices to a non-ACO practice, what happens to the members who follow their PCP to the new practice? Do the providers have to put signs in their office that states that they share in the savings, much like some of the requirements under capitation? If a PCP cancels their contract with all of the Medicare Advantage Plans, will the members be put in the ACO if they leave the Medicare Advantage Plan? This is not an exhaustive list of questions. In fact the answer to each of these questions can lead to more questions.O

bviously, there are many more unanswered questions then defined rules. Because of the preliminary nature of the development of this program it seems premature to put a go live date on the program at this point. There are several integrated delivery systems with most of their physicians employed that are being touted as the models for the ACOs. It seems they may be the only ones who are prepared to apply and be accepted in the first year of implementation, 2012. The devil is always in the details and since we have few, if any, details restraint may be the best approach.