Accountable Care Organizations: Odds and Ends

April 22, 2011

The Centers for Medicare and Medicaid Services (CMS) proposed rules for Accountable Care Organizations (ACOs) under the Medicare Shared Savings Program (MSSP) includes a number of requirements related to the structure and governance of ACOs, the shared savings program, ACO participation and provider eligibility, antitrust concerns, health information and privacy, and controlling fraud and abuse. This article discusses some of the odds and ends included in the proposed rules that are more nuanced, but nevertheless important.

  1. Effect of Demonstration Programs on ACOs
    In the proposed rules, CMS pointed out that four existing demonstration programs, including the Center for Medicare and Medicaid Innovation (also referred to as the Innovation Center), Independence at Home Medical Practices, the State Option to Provide Health Homes, and Community Health Teams, may reveal ways to improve the ACO model and generate a need to make regulatory changes to the MSSP. CMS intends to immediately integrate lessons learned from these demonstration programs through future rulemakings, but only in cases where CMS determines that an immediate regulatory change will be beneficial to the MSSP.
  2. Future Regulatory Changes for ACOs
    CMS recognized that regulatory changes may occur more frequently than the 3-year agreement period for ACOs and questioned whether existing ACO contracts should be subject to regulatory changes that arise during an existing agreement period. CMS acknowledged existing ACO agreements may be adversely affected by unanticipated regulatory changes. Nevertheless, the proposed rule provides that ACOs will be subject to future regulatory changes, even during the 3-year agreement period, except for any change that relates to (1) eligibility requirements concerning the structure and governance of ACOs, (2) calculating the sharing rate, and (3) the assignment of Medicare beneficiaries to an ACO. If an ACO fails to comply with future regulatory changes that do not fall within one of the identified exceptions, the ACO may be required to implement a corrective action plan. Continued noncompliance by an ACO may ultimately lead to termination from the program.
  3. Expansion of ACOs
    CMS used this discretionary power in the proposed regulations to expand the list of eligible provider types for the MSSP. CMS has proposed that critical access hospitals (CAHs) billing under method II will be able to form an ACO and federally qualified health centers (FQHCs) and rural health clinics (RHCs) will be able to participate in, but cannot form, an ACO.

    CMS also requested public comment on whether other provider types and suppliers should own or participate in ACOs. CMS will consider whether FQHCs and RHCs should be able to form an ACO. CMS will also consider whether skilled nursing facilities, long-term acute care hospitals, and other types of providers and suppliers that are not specifically designated as eligible participants in the MSSP may form and/or participate in an ACO.

  4. ACO Marketing Material Approval
    CMS issued ACO marketing guidelines in the proposed rules. CMS noted that it is concerned 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 to require that all marketing materials, communications, and activities related to the ACO and its participation in the MSSP, such as mailings, telephone calls or community events, used to educate, solicit, notify, or contact Medicare beneficiaries, must receive prior approval from CMS.
  5. Administrative and Judicial Review
    CMS restates the statutory limitations on judicial and administrative review related to the MSSP in the proposed regulations. CMS reminded providers and suppliers that, judicial and administrative review will not be available to ACOs in the following situations:
    1. Review by the Provider Reimbursement Review Board under Section 1869 of the Act.
    2. Initial determinations and provider appeals under Section 1878 of the Act.
    3. Specification of criteria under Section 1899(a)(1)(B) of the Act.
    4. Assessment of quality care furnished by an ACO and the establishment of performance standards under Section 1899(b)(3) of the Act.
    5. Assignment of Medicare beneficiaries to an ACO under Section 1899(c) of the Act.
    6. Determination of whether an ACO is eligible for shared savings under Section 1899(d)(2) of the Act.
    7. 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.
    8. The percent and any limit on the total amount of shared savings specified by the CMS under Section 1899(d)(2) of the Act.
    9. Termination of an ACO for failure to meet quality performance standards under Section 1899(d)(4) of the Act.
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