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Accountable Care Organizations for Original Medicare

Accountable Care Organizations

For Original Medicare Plans

Summary

The Patient Protection and Affordable Care Act contains provisions surrounding the establishment of Accountable Care Organizations (ACOs) under the Medicare Shared Savings Program. Under the final rule issued by the Centers for Medicare & Medicaid Services (CMS) on Oct. 20, 2011, ACOs – a group of physicians, hospitals and other health care professionals working together – would coordinate care and share in certain savings or losses for Medicare beneficiaries assigned to it in an attempt to improve results for patients with original (fee-for-service) Medicare – Medicare Parts A and B. The rule does not cover Medicare Advantage plans, Medicaid or commercial insurance.

The Medicare Shared Savings Program would reward ACOs that lower health care costs for Medicare beneficiaries (by allowing the ACO to share in certain savings) while also meeting performance standards on quality of care and other measures. ACOs could also have to share certain losses for failing to provide efficient, cost-effective care.

The final rule states three aims to the ACO Shared Savings Program: (1) better care for individuals, (2) better health for populations, and (3) lower growth in Medicare Parts A and B expenditures.

Quality Standards

To share in savings, ACOs must meet certain quality standards. There are approximately 33 quality measures and these standards fall into four key areas:

  • Patient/caregiver care experiences
  • Care coordination/patient safety
  • Preventive health
  • At-risk population

Patient, physician, facility or health care professional participation in an ACO is purely voluntary.

Groups of Providers Eligible to Participate

The following groups of physicians, facilities and health care professionals are eligible to participate as an ACO under the Medicare Shared Savings Program:

  • ACO professionals (physicians, hospitals and other eligible health care professionals) in group practice arrangements
  • Networks of individual practices of ACO professionals
  • Partnerships or joint venture arrangements between hospitals and ACO professionals
  • Hospitals employing ACO professionals
  • Critical access hospitals
  • Rural Health Clinics
  • Federally qualified health centers
  • Such other groups of providers of services and suppliers as the Secretary of Health and Human Services (HHS) determines appropriate, including certain critical access hospitals

Participation Requirements

Physicians, facilities and other health care professionals must meet certain eligibility requirements to participate in the Medicare Shared Savings Program. For example:

  • The ACO shall be willing to become accountable for the quality, cost and overall care of the original Medicare plan beneficiaries assigned to it.
  • The ACO shall enter into an agreement with the Secretary of HHS to participate in the Shared Savings Program for not less than a three-year period.
  • The ACO must be a formal legal entity with a tax ID number under state law and capable of receiving and distributing payments for shared savings to participating providers and performing other required ACO functions (such as certain reporting requirements).

The ACO must include:

  • Primary care ACO professionals that are sufficient for the number of Medicare beneficiaries assigned to the ACO.
  • At a minimum, the ACO needs at least 5,000 such beneficiaries assigned be eligible to participate in the Medicare Shared Savings Program.

Timing

The Shared Savings Program begins Jan. 1, 2012, but the final rule allows two start date options of April 1 and July 1, 2012 for the first year of the program.

Antitrust, Anti-kickback and Fraud and Abuse Guidance

In the final rule, HHS eliminated the proposed mandatory antitrust review requirement, and adopted a three-prong approach to allow the Federal Trade Commission and Department of Justice (Antitrust Agencies) to maintain competition among the ACOs:

  • A voluntary expedited antitrust review to any newly formed ACO before it is approved to participate in the Medicare Shared Savings Program.
  • The sharing of aggregate claims data regarding allowable charges and fee-for-service payments, which will assist the Antitrust Agencies in calculating market share for ACOs participating in the Medicare Shared Savings Program. In addition, HHS will require ACOs formed after March 23, 2010, to agree, as part of their application to participate in the Medicare SSP, to permit HHS to share a copy of their application with the Antitrust Agencies. Both the aggregate data and the information contained in these applications will help the Antitrust Agencies assess and monitor ACOs' effects on competition and take enforcement action, if appropriate.
  • The Antitrust Agencies will rely on their existing enforcement processes for evaluating concerns raised about an ACO's formation or its conduct in reaction to an antitrust complaint.

For More Information

  • Viewpoint: Value-Based Contracting and Accountable Care Organizations

Frequently Asked Questions

What is an ACO?

Under the final rule, an ACO refers to a group of physicians, facilities, and other health care professionals who agree to work together to coordinate care in an attempt to improve patient outcomes for those with original Medicare.

What is the purpose of an ACO?

The goal of an ACO is to deliver seamless, high quality care for Medicare beneficiaries. Under an ACO, physicians, facilities and health care professional will have access to more information about their Medicare patients' medical history and can communicate with a patient's other physicians/care providers. CMS believes that Medicare beneficiaries will have better control over their health care, and their physicians can provide better care because they will have greater information about their patients' medical history and can communicate with a patient's other physicians.

Will Medicare beneficiaries be required to participate in an ACO?

No. Medicare beneficiaries whose physicians participate in an ACO will still have a full choice of physicians, facilities and other health care professionals and can choose to see physicians outside of the ACO.

The final rule prohibits physicians, facilities and other health care professionals from requiring that a beneficiary obtain services from another such provider in the same ACO.

How will patients know if their physician, facility or health care professional is participating in an ACO?

Under the final rule, those participating in an ACO must notify the Medicare beneficiary. The beneficiary may then choose to receive services from that physician, facility or other health care professional or seek care from others that are not part of the ACO.

What is the Medicare Shared Savings Program?

ACOs create incentives for physicians, facilities and health care professionals to work together to treat an individual patient across care settings – including physicians' offices, hospitals, and long-term care facilities. The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while also meeting certain performance standards on quality of care.

How could physicians, facilities or other health care professionals participate?

To participate in the Medicare Shared Savings Program, physicians, facilities or other health care professionals must form or join an ACO by applying to CMS. An existing ACO will not be automatically accepted into the Shared Savings Program.

How would shared savings work or be calculated?

Medicare would continue to pay individual physicians, facilities, health care professionals and suppliers for specific items and services as it currently does under the original Medicare plan payment systems. CMS would also develop a benchmark for each ACO against which its performance is measured. These benchmarks will be used to assess whether the ACO qualifies to receive shared savings or be held accountable for losses.

How are networks of physician practices, particularly small physician practices in rural areas with limited resources, able to qualify and function as ACOs?

The Affordable Care Act included a number of provisions to assist rural physicians, facilities and other health care professionals, and the Medicare Shared Savings Program provides flexibility to organizations to determine the best structure to form an ACO.

CMS expects ACOs to form in rural areas as networks of physician group practices work together to coordinate care. In the final rule, HHS added certain critical access hospitals, federally qualified health centers, and rural health clinics as eligible to participate independently in the Medicare Shared Savings Program. These providers may become ACOs and be used to assign patients to the ACO.

How does CMS propose to monitor and prevent an ACO from limiting care?

The final rules include protections to ensure patients do not have their care choices limited by an ACO. CMS has proposed a vigorous monitoring plan that includes analyzing claims and specific financial and quality data.

The rule proposes to share beneficiary-identifiable data with an ACO. Could the beneficiary opt-out of data sharing?

Beneficiaries' data will not be shared if they do not want it to be shared. Beneficiaries will be given information in writing about sharing personal health data the first time that they see an ACO physician or health care professional.