On October 20, 2011, the Centers for Medicare and Medicaid Services (CMS)
issued the final rule (Final Rule) that will govern Accountable Care
Organizations (ACOs). The Final Rule sets forth the final requirements related
to the structure and governance of ACOs, the Medicare Shared Savings Program (MSSP), ACO
formation and participation, antitrust concerns, health information and privacy,
and controlling fraud and abuse. In this part of a multipart series on the Final
Rule, we highlight a variety of unrelated but important issues. In subsequent
parts, we will address ACO legal structure and governance, specifics about the
MSSP calculation, HIPAA and other implications for information
technology and other important issues for ACOs.
- Other ACO Owners/Participants
Section 1899(b)(1)(A) through (D) of the Social Security Act (the “Act”),
as amended by the Affordable Care Act, sets forth specific provider types
that may form and/or participate in an ACO. This section of the Act also
provides that CMS may expand the list of providers and suppliers eligible to
form or participate in an ACO by adopting new regulations. CMS used this
discretionary power in the proposed regulations and narrowly expanded the
list of eligible provider types that could form an ACO. CMS announced that,
in addition to the providers explicitly named in Section 1899(b)(1)(A)-(D)
of the Act, critical access hospitals (CAHs) billing under method II will be
able to form an ACO. CMS added that federally qualified health centers (FQHCs)
and rural health clinics (RHCs) will not be able to independently form an
ACO but may be an ACO participant.
In the Final Rule, CMS clarifies its list of providers of services and
suppliers that may join to form or just participate in an ACO. Specifically,
the entities identified in section 1899(b)(1)(A) through (D) of the Act will
be able to form ACOs, provided they meet all other eligibility requirements.
Additionally, CAHs billing under method II, FQHCs, and RHCs may also form
independent ACOs if they meet the eligibility requirements specified in the
Final Rule. In addition, any Medicare enrolled entities that are not
specified in the statutory definition of eligible entities in the Act can
participate in the MSSP as ACO
participants by joining an ACO containing one or more of the organizations
eligible to form an ACO.
- Demonstration Programs and Regulatory Effect on ACOs
In the proposed ACO rule, CMS noted that existing accountable care
demonstration programs, such as the Center for Medicare and Medicaid
Innovation, may reveal ways to improve the MSSP. CMS clearly stated its
desire to immediately implement regulatory changes that it believes will
improve the MSSP and considered the benefits and disadvantages of how
implementing such changes immediately might affect existing three-year ACO
agreements. CMS ultimately concluded in the proposed rule that ACOs will be
subject to future regulatory changes, even during the three-year agreement
period, except for any changes related to (i) eligibility requirements
concerning the structure and governance of ACOs, (ii) calculating the
sharing rate, and (iii) the assignment of Medicare beneficiaries to an ACO.
In the Final Rule, CMS finalizes its proposal that ACOs will be required
to adapt to regulatory changes, with the exception of changes to (i)
eligibility requirements concerning the structure and governance of ACOs,
(ii) calculation of sharing rate, and (iii) assignment of beneficiaries to
ACOs. CMS, however, modifies the proposed rule and will allow ACOs the
flexibility to voluntarily terminate their agreement in those instances when
regulatory standards are established during the agreement period which the
ACO believes will impact the ability of the ACO to continue to participate
in the MSSP.
- ACO Marketing Material Approval
CMS also issued ACO marketing guidelines in the proposed regulations,
which generated a significant amount of public comment. The ACO marketing
rules were proposed by CMS because the agency noted its concern that
Medicare beneficiaries may be misled about services available from an ACO or
about the providers and suppliers from whom the beneficiaries can receive
those services. CMS, therefore, proposed regulations that would have
required ACOs to obtain prior approval form CMS before the ACO could use any
materials, communications, and activities related the ACO and its
participation in the MSSP.
CMS did finalize the definition of marketing materials and activities
without substantive change to the proposed rules, but scaled back the prior
approval process in the Final Rule. CMS amended the definition to include
language in the proposed rule’s preamble that was inadvertently omitted from
the proposed regulation’s text. Accordingly, the Final Rule excludes from
the definition of marketing materials or activities those materials and
activities that do not constitute "marketing" under 45 CFR 164.501 and
164.508(a)(3)(i). In place of the proposed prior approval process, the Final
Rule allows ACOs to use marketing materials five days after filing them with
CMS if the organization certifies that the marketing materials comply with
all applicable marketing requirements. Additionally, CMS revised the
regulation to specify that all ACO-related marketing materials and
activities will be required to use template language when such language is
made available by CMS. All ACO marketing must comply with the prohibitions
set forth in the Final Rule regarding certain beneficiary inducements, must
not be used in a discriminatory manner or for discriminatory purposes, and
must not be inaccurate or misleading (materials must be provided in "plain"
language that is easily comprehensible, clear, concise, well-organized, and
comply with requirements of the Plain Writing Act of 2010). If CMS
determines that ACOs are not in compliance with the ACO marketing
guidelines, the ACO and its participants may be subject to penalties by CMS.
- Administrative and Judicial Review
CMS restated the statutory limitations on judicial and administrative
review related to the MSSP in the proposed regulations issued in March 2011.
CMS reminded providers and suppliers that, pursuant to Section 1899(g) of
the Act, judicial and administrative review will not be available to ACOs in
the following situations:
- Review by the Provider Reimbursement Review Board under Section 1869
of the Act.
- Initial determinations and provider appeals under Section 1878 of
- The specification of criteria under Section 1899(a)(1)(B) of the
- The assessment of quality care furnished by an ACO and the
establishment of performance standards under Section 1899(b)(3) of the
- The assignment of Medicare beneficiaries to an ACO under Section
1899(c) of the Act.
- The determination of whether an ACO is eligible for shared savings
under Section 1899(d)(2) of the Act.
- The determination of the amount of shared savings for a
participating ACO, including the determination of the estimated average
per capita Medicare expenditures under the ACO for Medicare fee for
service beneficiaries assigned to the ACO and the average benchmark for
the ACO under Section 1899(d)(1)(B) of the Act.
- The percent and any limit on the total amount of shared savings
specified by the CMS under Section 1899(d)(2) of the Act.
- The termination of an ACO for failure to meet quality performance
standards under Section 1899(d)(4) of the Act.
In the Final Rule, CMS finalized the reconsideration review process as
proposed, with one exception. CMS decided to eliminate the specific provision
related to review of determinations made by a reviewing antitrust agency because
of certain revisions that CMS made to procedures for antitrust review in the
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