CMS releases final rule for ACOs, relaxes requirements to participate

By Kate Alfano

On Oct. 20, the Centers for Medicare and Medicaid Services released the final rule for establishing accountable care organizations under the Medicare Shared Savings Program. It represents a significant departure from initial guidelines released on March 31, 2011, which many commenters called “too prescriptive and burdensome.” CMS estimates that the final rule will help create as many as 270 Medicare ACOs—an increase from the 75-150 originally expected to participate.

According to AAFP, “the final rule largely recognizes that small- to medium-sized physician practices cannot convert their administrative procedures and health record systems overnight, and the final rule is designed to provide both time and resources to make the program more attractive.”

The Medicare ACO model encourages groups of affiliated health care professionals to coordinate care across care settings to improve the health and experience of the patient and reduce the rate of growth in health care spending. These groups can include physicians in group practice, networks of individual practices, hospitals and physicians in partnerships, and hospitals employing physicians. There is no requirement that an ACO include a hospital.

Among the changes from the proposed rule, the final rule gives primary care physicians the option to participate in multiple Medicare ACOs; replaces the proposed retrospective beneficiary assignment method with a prospective assignment method in which beneficiaries are identified quarterly; reduces the number of individual quality measures that will decide if an ACO qualifies for shared savings by half, from 65 to 33; shares quality reporting requirements for the second and third years of the program; allows critical-access hospitals, federally qualified health centers, and rural health clinics to participate; and removes the use of electronic health records as a requirement.

It also eliminates financial penalties for some groups by offering two tracks for participation. The first track allows an ACO to operate on a shared-savings-only arrangement for the three-year agreement. The second track allows ACOs to share in savings and losses for the agreement period in return for a higher share of any savings it generates.

Physicians’ participation in ACOs and the Medicare Shared Savings Program is voluntary. Individual ACOs must include enough primary care professionals to care for the Medicare beneficiaries assigned to that ACO, and an ACO must have an assignment of at least 5,000 Medicare fee-for-service beneficiaries.

A prospective ACO must apply to the program and include information on how they plan to deliver high-quality care and lower the growth of expenditures for their assigned beneficiaries. Once accepted, CMS offers two start dates: April 1 and July 1. Under both, the first performance year ends Dec. 31, 2013, and the agreement period lasts through Dec. 31, 2015. During this period, CMS estimates Medicare could save $1.8 billion and share $1.3 billion in bonuses to ACOs for hitting savings targets, according to the American Medical Association.

An earlier proposal would have required an ACO to seek an antitrust review from the IRS, FTC, and Department of Justice. CMS did not pursue this provision. However, the agencies have pledged to monitor the competitive impact of the networks and may adjust requirements in the future.

Addressing concerns for small practices and rural community hospitals, CMS also announced the advanced payment initiative, which will allow these groups to receive upfront access to capital to cover startup costs. The program is committing $170 million for ACOs that launch in 2012.

In a perspective article published in the New England Journal of Medicine, CMS Administrator Donald M. Berwick, M.D., said, “Whether provided through ACOs or an alternative innovation opportunity, coordinated care is meant to allow providers to break away from the tyranny of the 15-minute visit, instill a renewed sense of collegiality, and return to the type of medicine that patients and families want.”

“For patients, coordinated care means more ‘quality time’ with their physician and care team (a patient’s advocate in an increasingly complex medical system) and more collaboration in leading a healthy life. And for Medicare, coordinated care represents the most promising path toward financial sustainability and away from alternatives that shift costs onto patients, providers, and private purchasers.”