CMS Issues Final ACO Rules

On October 20, 2011, CMS released the Final Rules governing Accountable Care Organizations (ACOs).  A centerpiece of discussion in the healthcare industry of late, ACOs are a significant focus of the Medicare Shared Savings Program (MSSP) introduced in March, 2010.  The Final Rule contains significant changes to the regulations initially proposed by CMS.

The initial MSSP application rolling start dates are April 1, 2012 or July 1, 2012 and require a commitment of three years.  ACOs seeking to participate in the MSSP must meet certain governance, organizational and leadership requirements established by CMS.  ACOs will be given the option of choosing one of two so-called “tracks.”  One track allows ACOs to share up to 50 percent of first dollar savings without the risk of repaying losses.  The other track allows ACOs to share 60 percent of savings, but it also requires the sharing of losses. 

The structural requirements of ACOs are designed around ACO “professionals” who include physicians, physician assistants, nurse practitioners and clinical nurse specialists.  As such, physicians may participate in the MSSP by forming an ACO using their group practice, through an ACO composed of a network of practices, or by partnering their group practice with a hospital.  In limited circumstances, physicians may participate through CAHs, FQHCs and RHCs.

Each ACO must have a sufficient number of “primary care physicians” (defined as physicians with a designation of internal, geriatric, family or general medicine) to accommodate at least 5,000 Medicare beneficiaries.  Beneficiaries will be assigned to ACOs based on their utilization of “primary care services” identified by CMS as a select list of HCPCS codes.  Under the Final Rule, if a beneficiary receives a plurality of her primary care services from an ACO’s primary care physician, CMS will assign the beneficiary to that ACO.  CMS has also developed a system for assigning beneficiaries to an ACO where the beneficiary has not seen a primary care physician, but where the beneficiary has received primary care services from a non-primary care physician, such as an OB/GYN.  It is important to note that primary care physicians may only be affiliated with one ACO per three-year agreement.

The portion of the Final Rule that will have the most significant impact on physicians relates to the quality of care information ACOs must report to CMS.  The criteria by which CMS will determine an ACO’s eligibility to share savings, the “Quality Performance Standard,” consists of 33 reporting measures divided into four “domains” covering patient experience, patient care, preventative health and at-risk populations.  CMS will collect the data through a combination of claims, surveys and the Physician Quality Reporting System.  Participants will be eligible to share in savings by meeting the reporting requirements in the first year.  Subsequently, ACO participants will be required to attain a minimum performance score to share in savings and remain in the MSSP.

It remains to be seen whether the Final Rule can rekindle the fading excitement and anticipation that initially surrounded ACOs and the MSSP.  This will, in large part, be determined by the physician community’s response to the Final Rule.  Both Congress and CMS have repeatedly emphasized that physician leadership is the lynchpin of the MSSP.  Invariably, many physicians will choose not to participate in ACOs; however, the landscape of physician reimbursement is changing.  ACOs appear merely to be one facet of a larger movement away from the fee-for-service model and toward a model built on clinical and financial integration, bundled payments and value-based purchasing.

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