Accountable Care Organizations (ACOs)

By: Dennis Stewart, Streamline Savings Accountable Care Organizations (ACOs), by definition, serve Medicare patients, and are groups of doctors, hospitals, and other health care providers, who come together voluntarily to give coordinated high quality care. The coordinated care helps ensure that their patients, especially the chronically ill, get the right care at the right time. In addition to the overall goal of providing quality medical services, the two major goals (which are goals of most medical facilities), are avoiding unnecessary duplication of services and preventing medical errors. When an ACO is successful in delivering high-quality care, and spending health care dollars more wisely, the ACO should, and will share in the savings it achieves for the Medicare program. In March 2011, the Department of Health and Human Services (HHS) released proposed new rules to help doctors, hospitals, and other providers better coordinate care for Medicare patients through ACOs. The Medicare Shared Savings Program will reward ACOs that lower growth in health care costs while meeting performance standards on quality of care. Patient and provider participation in an ACO is purely voluntary.
Facts: 25% of Americans, and 66% of Americans over 65 , have multiple chronic conditions. One in seven Medicare patients admitted to a hospital has been subject to a harmful medical mistake in the course of their medical care. 20% of Medicare patients discharged from a hospital is readmitted within 30 days

There is no doubt that improved medical care through Accountable Care Organizations will help improve the care Medicare beneficiaries receive, while also helping lower costs by billions of dollars. The Affordable Care Act specifies that ACOs may include the following types of groups of providers and suppliers of Medicare-covered services:

ACO professionals (i.e., physicians and hospitals meeting the statutory definition) in group practice arrangements,

Networks of individual practices of ACO professionals, Partnerships or joint ventures arrangements between hospitals and ACO professionals, or Hospitals employing ACO professionals, and Other Medicare providers and suppliers as determined by the Secretary.

ACO collaboration means that all stakeholders must focus on managing cost and quality across a shared population and the continuum of care. Establishing credibility with physicians is essential in achieving their buy-in, and without their trust and acceptance, any effort to influence clinical behavior may fail.

The Final Rule on Shared Savings Program: Accountable Care Organizations (Issued by the Centers for Medicare & Medicaid Services) has the following Index:

I. Background A. Introduction and Overview of ValueBased Purchasing B. Statutory Basis for the Medicare Shared Savings Program C. Overview of the Medicare Shared Savings Program D. Public Comments Received on the Proposed Rule E. Reorganization of the Regulations Text II. Provisions of the Proposed Rule, Summary of and Responses to Public Comments, and Provisions of the Final Rule A. Definitions B. Eligibility and Governance 1. General Requirements a. Accountability for Beneficiaries b. Agreement Requirement c. Sufficient Number of Primary Care Providers and Beneficiaries d. Identification and Required Reporting on Participating ACO Professionals 2. Eligible Participants 3. Legal Structure and Governance a. Legal Entity and Governance a. Legal Entity b. Distribution of Shared Savings c. Governance d. Composition of the Governing Body 4. Leadership and Management Structure 5. Processes To Promote Evidence-Based Medicine, Patient Engagement, Reporting, Coordination of Care, and Demonstrating Patient-Centeredness a. Processes To Promote Evidence-Based Medicine b. Processes To Promote Patient Engagement c. Processes To Report on Quality and Cost Measures d. Processes To Promote Coordination of Care 6. Overlap With Other CMS Shared Savings Initiatives a. Duplication in Participation in Medicare Shared Savings Programs b. Transition of the Physician Group Practice (PGP) Demonstration Sites Into the Shared Savings Program

c. Overlap With the Center for Medicare & Medicaid Innovation (Innovation Center) Shared Savings Models C. Establishing the Agreement With the Secretary 1. Options for Start Date of the Performance Year 2. Timing and Process for Evaluating Shared Savings 3. New Program Standards Established During the Agreement Period 4. Managing Significant Changes to the ACO During the Agreement Period 5. Coordination With Other Agencies a. Waivers of CMP, Anti-Kickback, and Physician Self-Referral Laws b. IRS Guidance Relating to Tax-Exempt Organization Participating in ACOs c. Antitrust Policy Statement d. Coordinating the Shared Savings Program Application With the Antitrust Agencies D. Provision of Aggregate and Beneficiary Identifiable Data 1. Data Sharing 2. Sharing Aggregate Data 3. Identification of Historically Assigned Beneficiaries 4. Sharing Beneficiary Identifiable Claims Data 5. Giving Beneficiaries the Opportunity To Decline Data Sharing E. Assignment of Medicare Fee-for-Service Beneficiaries 1. Definition of Primary Care Services a. Consideration of Physician Specialties in the Assignment Process b. Consideration of Services Furnished by Non-Physician Practitioners in the Assignment Process c. Assignment of Beneficiaries to ACOs That Include FQHCs and/or RHCs (1) Identification of Primary Care Services Rendered in FQHCs and RHCs (2) Identification of the Type of Practitioner Providing the Service in an FQHC/RHC (3) Identification of the Physician Specialty for Services in FQHCs and RHCs 2. Prospective vs. Retrospective Beneficiary Assignment To Calculate Eligibility for Shared Savings 3. Majority vs. Plurality Rule for Beneficiary Assignment F. Quality and Other Reporting Requirements 1. Introduction 2. Measures To Assess the Quality of Care Furnished by an ACO a. General b. Considerations in Selecting Measures c. Quality Measures for Use in Establishing Quality Performance Standards That ACOs Must Meet for Shared Savings 3. Requirements for Quality Measures Data Submission by ACOs

a. General b. GPRO Web Interface c. Certified EHR Technology 4. Quality Performance Standards a. General b. Performance Scoring (1) Measure Domains and Measures Included in the Domains (2) Methodology for Calculating a Performance Score for Each Measure Within a Domain (3) Methodology for Calculating a Performance Score for Each Domain (4) The Quality Performance Standard Level 5. Incorporation of Other Reporting Requirements Related to the PQRS and Electronic Health Records Technology Under Section 1848 of the Act 6. Aligning ACO Quality Measures With Other Laws and Regulations G. Shared Savings and Losses 1. Authority for and Selection of Shared Savings/Losses Model 2. Shared Savings and Losses Determination a. Overview of Shared Savings and Losses Determination b. Establishing the Benchmark c. Adjusting the Benchmark and Actual Expenditures (1) Adjusting Benchmark and Performance Year Average Per Capita Expenditures for Beneficiary Characteristics (2) Technical Adjustments to the Benchmark and Performance Year Expenditures (a) Impact of IME and DSH (b) Geographic and Other Payment Adjustments (3) Trending Forward Prior Years Experience To Obtain an Initial Benchmark (a) Growth Rate as a Benchmark Trending Factor (b) National Growth Rate as a Benchmark Trending Factor d. Updating the Benchmark During the Agreement Period e. Determining Shared Savings (1) Minimum Savings Rate (a) One-Sided Model (b) Two-Sided Model (2) Quality Performance Sharing Rate (3) Additional Shared Savings Payments (4) Net Sharing Rate (5) Performance Payment Limits f. Calculating Sharing in Losses (1) Minimum Loss Rate (2) Shared Loss Rate g. Limits on Shared Losses h. Ensuring ACO Repayment of Shared Losses i. Timing of Repayment j. Withholding Performance Payments k. Determining First Year Performance for

ACOs Beginning April 1 or July 1, 2012 (1) Interim Payment Calculation (2) First Year Reconciliation (3) Repayment Mechanism for ACOs Electing Interim Payment Calculations 3. Impact on States H. Additional Program Requirements and Beneficiary Protections 1. Background 2. Beneficiary Protections a. Beneficiary Notification b. ACO Marketing Guidelines 3. Program Monitoring a. General Methods Used to Monitor ACOs b. Monitoring Avoidance of At-Risk Beneficiaries (1) Definition of At-Risk Beneficiaries (2) Penalty for Avoidance of At-Risk Beneficiaries c. Compliance With Quality Performance Standards 4. Program Integrity Requirements a. Compliance Plans b. Compliance With Program Requirements c. Conflicts of Interest d. Screening of ACO Applicants e. Prohibition on Certain Required Referrals and Cost Shifting f. Record Retention g. Beneficiary Inducements 5. Terminating an ACO Agreement a. Reasons for Termination of an ACOs Agreement b. Corrective Action Plans 6. Reconsideration Review Process III. Collection of Information Requirements IV. Regulatory Impact Analysis A. Introduction B. Statement of Need C. Overall Impact D. Anticipated Effects 1. Effects on the Medicare Program a. Assumptions and Uncertainties b. Detailed Stochastic Modeling Results c. Further Considerations 2. Impact on Beneficiaries 3. Impact on Providers and Suppliers 4. Impact on Small Entities E. Alternatives Considered F. Accounting Statement and Table G. Conclusion The entire final rule can be found at :

http://www.regulations.gov/#!documentDetail;D=CMS-2011-0139-0489

The number of ACOs has increased by almost 40% in the first half of 2012 past six months, with over 200 models identified in 45 states. The largest increase has been hospital-sponsored ACOs, which have increased from 99 in 2011 to 118. An ACO doesnt appear overnight. It takes months, sometimes even years,
of strategic planning and cooperation between providers and payors. It also requires an incredible amount of human capital, and monetary resources.