CMS Announces New Accountable Care Organization Initiatives

Health Law Bulletin

CMS Announces New Accountable Care Organization Initiatives

May 31, 2011

The Affordable Care Act, which is the health care reform legislation enacted by Congress in March 2010, requires the Department of Health and Human Services ("HHS") to develop the Medicare shared savings program (the "Shared Savings Program") by January 1, 2012.  Accountable care organizations ("ACOs") are the entities by which health care providers may contract with Medicare as part of the Shared Savings Program. Specifically, ACOs are provider-based entities designed to take responsibility for meeting the health care needs of a defined population with the goal of simultaneously improving health, patient experience and reducing per capita costs.

Poor Reception for the Proposed ACO Regulations

As we reported recently, on March 31, 2011 the Centers for Medicare and Medicaid Services ("CMS") issued the proposed rule for the Shared Savings Program.  Since its issuance, we understand that the proposed rule has come under reportedly intense scrutiny and criticism from prospective participants in the Shared Saving Program.  Critics have included Mayo Clinic,  Cleveland Clinic, Geisinger Health System and Intermountain Health.  Some of the criticisms include the burdensome nature of the regulations, the uncertain financial risks of participation, and the potentially high start-up costs of an ACO.

CMS's New Initiatives

On May 17, 2011, CMS announced three new initiatives relating to ACOs that attempt to alleviate some of these problems.

Pioneer ACO Model.  First, CMS announced that a new ACO model will be made available to providers this summer in the form of the "Pioneer ACO Model," which is designed for more mature integrated organizations ready to participate in shared savings now.  The Pioneer ACO Model is a three year program. During the first two years, Pioneer ACOs will participate in a shared savings payment policy with generally higher levels of shared savings and risks than what is currently being proposed under the Shared Savings Program.  In the third year, Pioneer ACOs that have demonstrated a specified level of savings over the first two years would be eligible to move a substantial portion of their payments to a population-based model. Under the population-based model, Pioneer ACOs would receive per-beneficiary, per-month payments that would replace in large part the current fee-for-service payment policy.  Applicant ACOs would have to serve at least 15,000 beneficiaries (5,000 in rural areas).  Also, by the end of 2012, Pioneer ACOs must demonstrate that 50% of the ACO's PCPs have met the requirements for meaningful use of electronic medical records ("EMR") and CMS will give further preference to applicant ACOs with advanced EMR capabilities.  Parties interested in participating in the Pioneer ACO Model must submit a non-binding letter of intent to CMS by June 10, 2011 and applications must be submitted by July 18, 2011.

Advance Payment ACO Model.  Second, CMS is seeking comment on an Advance Payment ACO Model that would provide up-front capital to providers to support the formation of ACOs.  Advanced payments would be recouped from an ACO's earned shared savings.  Comments should be submitted by June 17, 2011.

Accelerated Development Learning Sessions.  Third, CMS has set up Accelerated Development Learning Sessions as a way for provider groups to learn about how to coordinate patient care through ACOs. Four sessions will be offered in 2011 with the first session to tke place from June 20-22, 2011 in Minneapolis, MN.  These sessions are free and are intended to help providers develop an action plan for creating an ACO

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If you have any questions or concerns regarding these new initiatives, please contact us.

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