On March 31, 2011, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule which would implement section 3022 of the Patient Protection and Affordable Care Act (Affordable Care Act) relating to Medicare payments to providers of services and suppliers participating in Accountable Care Organizations (ACOs). 76 Fed. Reg. 19528 (April 7, 2011). Under these provisions, providers of services and suppliers can continue to receive traditional Medicare fee-for-service payments under Part A and Part B, and be eligible for additional payments based on meeting specified quality and savings requirements. CMS will accept comments on the proposed rule through June 6, 2011.
The proposed rule is extensive, such that a comprehensive analysis cannot be provided through this article. Accordingly, this article merely highlights several of the notable provisions.
The Affordable Care Act lists four groups of providers of services and suppliers as eligible to participate as an ACO: (1) ACO professionals in group practice arrangements; (2) networks of individual practices of ACO professionals; (3) partnerships or joint venture arrangements between hospitals and ACO professionals; and (4) hospitals employing ACO professionals. The proposed rule also allows Critical Access Hospitals meeting certain billing requirements to become ACO participants. These five groups may also establish an ACO with broader collaborations by including additional Medicare enrolled entities such as Federally Qualified Health Centers and Rural Health Centers. CMS notes that this proposal potentially increases the administrative complexity of implementing the program and could also require stronger measures to oversee the varied kinds of ACO arrangements that might evolve. However, CMS believes that this approach best serves the goals of the program by allowing greater opportunities for broadly transforming the health care delivery system and increasing access to high quality and lower cost care under the Shared Savings Program for Medicare beneficiaries, regardless of where they live. CMS is also seeking comments on the kinds of providers and suppliers that should or should not be included as potential ACO participants.
Under the proposed rule, ACOs must be a legal entity. The Affordable Care Act requires that ACOs have a shared governance mechanism and a formal legal structure for receiving and distributing shared payments. In response, CMS proposes that each ACO be constituted as a legal entity with its own Tax Identification Number (TIN). Although ACOs will be required have a TIN, the proposed rule does not require that the ACOs themselves be enrolled in the Medicare program. Because the Affordable Care Act contemplates payment directly to the ACO, the rule proposes that CMS pay the ACO TIN directly.
The proposed rule also contains a three-year agreement requirement between the ACO and CMS, wherein the ACO agrees to comply with all of the requirements for participation in the Shared Savings Program. Through this agreement, the ACO must affirm its accountability for the quality, cost, and overall care of the Medicare Fee for Service beneficiaries assigned to the ACO.
Regarding the distribution of the shared savings, the proposed rule requires ACOs to provide a description in their application of the criteria they plan to employ for distributing shared savings among ACO participants and ACO providers/suppliers, and how any shared savings will be used to align with the aims of better care for individuals, better health for populations, and lower growth in expenditures.
The Affordable Care Act and proposed rule require each ACO to have a sufficient number of primary care providers and beneficiaries. Specifically, the Affordable Care Act requires that an ACO have at least 5,000 beneficiaries assigned to it. The proposed rule provides that if an ACO's assigned population falls below 5,000 during the course of the three-year agreement period, that CMS would issue a warning and place the ACO on a corrective action plan. The ACO would remain eligible for shared shavings for the performance year for which the warning was issued. However, if the ACO fails to meet the eligibility criterion of having more than 5,000 beneficiaries by the completion of the next performance year, the ACO's participation agreement will be terminated and the ACO will not be eligible to share in savings for that year.
Providers are encouraged to submit comments to CMS regarding the proposed rule. The Department of Health and Human Services is planning a series of open door forums on the proposal during the comment period.
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