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ACO Final Rules Ease Requirements, Reduce Risk

 |  By cclark@healthleadersmedia.com  
   October 20, 2011

Updated: 10/21/2011 7:20 AM ET.

Federal health, trade and anti-trust agencies on Thursday released their long-awaited set of final rules governing accountable care organizations, with major concessions to the original plan that had soured many healthcare leaders and physicians against participating.

The 696-page document, 267 pages longer than the proposed rule, includes more generous shared savings incentives, omits 32 of the 65 original quality measures, and gives ACO candidates more time to get started.

A critical change is that the rule no longer requires that 50% of participating physicians be approved under meaningful use requirements for electronic health record use.
Compared with the proposed rule, there are many more opportunities for new ACOs to participate without absorbing risk in the earlier years, as well as major changes in at least 10 other critical areas, revisions that many health leaders think will encourage more providers to sign up.

Significantly, each ACO will now know prospectively, instead of retrospectively, who their included beneficiaries are, and will be able to contact them, which they could not do before. As before, however, beneficiaries will be able to opt out of the program as well as seek care outside of the ACO.

Donald Berwick, MD, administrator for the Centers for Medicare & Medicaid Services, said during news briefing that multiple federal agencies made the changes in response to "mountains of comments" and many meetings with providers and patient groups since the proposed rule was released March 31. Coordination with multiple branches of government such as the Department of Justice, the Internal Revenue Service and the Federal Trade Commission were required to iron out concerns about the potential for ACOs to dominate a market.


"We've been able to fine tune and improve these rules to better meet the needs for a range of stakeholders, especially patient sand providers of care, no matter where they are on their spectrum of coordinated patient-centered care," Berwick said.

Because many providers complained that they lacked the considerable financial resources necessary to launch an ACO, CMS also released a new Advanced Payment Model for physician-owned and rural organizations to join, in which they would receive funds in advance that would be recouped from future savings in care provided down the road.

With an estimated 50 to 270 organizations participating in an ACO, the rule envisions a total aggregate median impact of $470 million in net federal savings for calendar years 2012 through 2015. Aggregated start-up investment costs are estimated at between $29 million to $157 million, with ongoing annual operating costs between $63 million and $342 million.

For fiscal year 2012, those organizations in the lowest performing percentile would receive $60 million in bonus payments while those in the 90th percentile would get $170 million.  By year 2015, bonus payments for those with the same percentiles of performance would receive $360 million to $740 million.

Among some of the other detailed changes from the proposed rules governing ACOs, also called the Medicare Shared Savings Program, are these:

Beneficiaries
 Instead of beneficiaries being retrospectively assigned to the ACO after the performance period, beneficiaries would be prospectively assigned and identified quarterly, with final reconciliation after each performance year based on which patients the ACO served.

Cost Sharing with Medicare
ACOs would be able to share cost savings with Medicare after the first dollar of savings, rather than reach a threshold of 2% reduction as the proposal required.  For example, if the baseline cost of care was $1 million, the ACO would have had to achieve a $20,000 saving before retaining half of that saving. Now, any saving below the baseline may be shared at a 50% or 60% split, depending on the type of ACO.

Quality Measures
CMS will phase in quality measures, starting with 33 instead of the originally proposed 65.  Those deleted include a composite score for 11 types of healthcare acquired conditions, and fewer composite measures for disease conditions such as diabetes, heart failure, ischemic vascular disease and coronary artery disease.

Expanded List of Eligible Providers
The final rule added to the list of types of providers who could form an ACO Federally Qualified Health Centers and Rural Health Clinics.

Advanced Payment Model
A new program called the Advanced Payment Model allows for selected ACOs to receive three types of payments: An up front fixed payment, an up front,variable payment, or a monthly payment of varying amount "depending on the number of Medicare beneficiaries historically attributed to the ACO."

"When folks see the rules and the many changes, they will see that CMS listens," said CMS Deputy Administrator and Director of the Center for Medicare Jonathan Blum. While the program "is responsive to the comments to ensure momentum and to ensure participation, but at the same time it's not taking away the quality goals and the care improvement goals that we have."

Officials for the American Medical Association, the American Hospital Association, and the Premier Healthcare Alliance, a quality and purchasing group representing 2,500 hospitals, say they think the numerous revisions will make more hospitals and doctors willing to partner to coordinate care and save Medicare spending.

"We were very pleased at the changes the anti-trust agencies made to the ACO rule, said Linda Fishman, Senior Vice President for Policy for the AHA during a news briefing.  "This is a big win for hospitals because they eliminated the requirement that you must pass muster with anti-trust agencies, so anti-trust will no longer be a barrier to participation."

Peter Carmel, MD, President of the American Medical Association, said in a statement that his organization also is pleased. "This rule allows ACOs to share in every dollar of cost savings and includes an option that limits financial risk, which is important for many physician practices.

However, several healthcare leaders who have followed the evolution of the ACO rules say they still have some major disappointments.

"We are troubled that the agency has chosen to move forward with an unworkable plan to allow beneficiaries to participate in the ACO, but also opt-out of sharing the data," Premier said in a prepared statement.  "Without access to beneficiary data, ACOs will be hamstrung in efforts to target interventions that are essential to improve care quality, provide convenient choices and enhance overall compliance with recommended care."

This "rigidity," the purchasing groups said, "could have the unintended consequence of limiting necessary services that would enhance compliance with treatment plans, and compromise the ACO’s ability to achieve the goals of better health, better healthcare and reduced expenses."

During Berwick's remarks, he mentioned that ACOs are supposed to change the way care is provided. "If you want to know what we're after," Berwick said, "just ask patients.

"For them, great healthcare means time with your doctor, so you can get your questions answered and learn more about how to stay healthy... it means that your doctors are working together, in very close communication so you can keep your care organized so you don't get confused, you don't get lost or feel forgotten.

"It means 100% reliable access if you have an emergency in the middle of the night, and a promise that your own doctor will know right away when that happens.

"And that when you go home from the hospital, the help doesn't stop. It means that someone is making sure that you have the information and the help you need to stay home, and stay healthy instead of bouncing back into the hospital with a complication that could have been prevented."

Read the full shared savings final rule, and a fact sheet.

View the Advanced Payment Model.

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