CMS Final Rule on Accountable Care Organizations 

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CMS recently released the final rule governing accountable care organizations (ACOs), a Medicare shared savings program. As mandated by the Affordable Care Act (ACA), the program is scheduled to begin next year. CMS has included more flexibility for ACOs to begin the program, including both April 1 and July 1 start dates. Below is a summary of key provisions in the final rule, specifically those upon which the AASLD commented.

Governance and Leadership
CMS finalized the requirement that an ACO be a legal entity capable of all of program functions described in the final rule; it must be able to accept and distribute the shared savings generated by the program. While the final rule mandates that the ACO have a governing body, this body no longer needs to have a representative from each Medicare-enrolled ACO participant TIN. Also, CMS eliminated the requirement from its proposal that each ACO participant have proportionate control on the governing body to provide for flexibility in ACO governance. CMS also eliminated its proposal to require representation of particular categories of providers and suppliers or other stakeholders for the sake of flexibility.

The governing body must be identifiable with the authority to execute the functions of the ACO. It will provide oversight and direction for the ACO, operate transparently and will have a fiduciary duty to the ACO. 

CMS finalized its proposal that ACO participants have 75 percent control of the governing body. Patient involvement on the governing board will be required as proposed. The participant must be a Medicare fee-for-service beneficiary; however, CMS will not impose more specific requirements for the patient representative preferring that ACOs develop innovative ways to involve beneficiaries in ACO governance. 

Assignment of Medicare Fee-for-Service Beneficiaries
CMS is finalizing the requirement that only Medicare fee-for-service beneficiaries enrolled under parts A and B be assigned to an ACO. For the purpose of assignment, primary care services will be the set of services identified by the following HCPCS codes: 99201 through 99215, 99304 through 99340, 99341 through 99350, the Welcome to Medicare Visit and the Annual Wellness Visit.  These codes will be used to determine if a FFS beneficiary received a primary care service during the assignment period.

After identifying all patients who received a primary care service from a physician who is an ACO provider/supplier, CMS will employ a step-wise approach as the basic assignment methodology. Beneficiaries will first be assigned on the basis of primary care service utilization provided by a primary care physician. Those beneficiaries that have not received a primary care service from a primary care physician may be assigned on the basis of receiving primary care services provided by other physicians, which include all specialists; this change recognizes that many specialists provide primary care services for patients with serious and chronic conditions. The step wise assignment process will also consider primary care services provided by non-phyisician health care professionals in the ACO. Another major change is Federally Qualified Health Centers and Rural Health Centers will be included in the assignment calculus, allowing these entities to participate in the program.

CMS received comments on whether to use prospective or retrospective assignment, ultimately settling on an approach that incorporated both. There will be preliminary prospective assignment at the beginning of the performance year based on the most recent data available. Quarterly updates will be made based on the most recent 12 months of data. At the end of the performance year, final assignment will be made.

Clarifying Referral Relationships
Both the proposed and final rules stressed that the Medicare beneficiary would retain the freedom to choose any participating Medicare provider, regardless of whether that provider was in the ACO. However, AASLD and other specialty groups expressed concern about patient access to the specialist of his or her choosing. CMS recognized that there would be a strong incentive for ACOs to require referrals to be made within the ACO under the proposal. The final rule outlined that CMS will monitor the actions of ACOs to determine whether an ACO, its participants or its providers/suppliers are interfering with the patient’s freedom of choice by restricting referrals.

Quality and Other Reporting Requirements
CMS proposed the use of 65 quality measures to determine if an ACO meets quality performance standards for the first performance period and those for years 2 and 3 of the ACO would be established through future rulemaking. This proposal was deemed my many groups, including AASLD, to be burdensome. In response, CMS finalized the use of 33 quality measures, which would be scored as 23 measures. The patient survey modules and the all or nothing diabetes and CAD measures will score as one measure each. 

To eliminate over 30 measures, CMS removed those perceived as redundant, operationally complex or burdensome and retained those that would still demand a high standard of quality and focused on high priority areas. ACOs will be required to comply with measures updates made in future rulemaking. CMS also made it clear that it may add or remove measures in future years as the agency develops a better understanding of the types of measures most important to assess the quality of care provided. AASLD suggested that hepatitis measures currently included in the Physician Quality Reporting System (PQRS) be incorporated into the ACO measures set. CMS rejected this comment as well as requests from other groups to include other specialty specific measures. However, one of the 33 measures is a consumer assessment of health providers and systems: access to specialists, which should help address AASLD’s concerns about access to hepatologists for patients in an ACO. 

ACOs will be required to report on all 33 measures for all reporting periods in each performance year of their agreement period: 7 of the measures are collected via patient survey, 3 are calculated via claims, 1 is calculated from EHR Incentive program data and 22 are collected via the GPRO web interface. Pay-for-performance will be phased in for performance years 2 and 3.

For those who were concerned about risk adjustment, CMS stated that it is included for a number of the measures, but is generally limited to age and gender. Risk adjustment will be used in the Risk-Standardized, All Condition Readmission measures, for which more details will be made available. 

CMS will be adding an Access to Specialists module that will respond to concerns about care coordination and specialty care to emphasize the importance of specialty care within an ACO. It will also ensure that ACOs are not avoiding at risk patients. 

In its proposed rule, CMS intended to align the ACO Shared Savings Program with the EHR Incentive Program. In the final program, CMS is including one quality measure that rewards and encourages greater EHR use, which is percent of primary care providers who successfully quality for an EHR Incentive Program payment; this measure will be double weighted for scoring purposes. CMS eliminated the requirement that 50 percent of an ACO’s primary care physicians be meaningful users of EHRs. This measure was retained because CMS believes it is important to encourage EHR adoption even if providers have not yet become meaningful users. However, while this measure was retained, EHR technology will not be a reporting mechanism at the start of the program; it will be reconsidered in future years. 

Incorporating Reporting Requirements Related to PQRS and EHR Technology
CMS finalized its proposal to incorporate PQRS reporting requirements and incentive payment in the ACO program. This means that ACOs will use the GPRO, web interface, and that eligible professionals who are ACO providers/suppliers will constitute a group practice under their ACO TIN to qualify for a PQRS incentive.  Reporting on the GPRO quality measures in the ACO program will fulfill the reporting requirements to avoid the payment adjustment beginning in 2015. CMS did not finalize its proposal that would have prevented receipt of PQRS incentive for successful reporting if the Shared Savings Program quality performance standard was not met and the ACO was not eligible for shared savings. 

While CMS received comments about standardizing its reporting requirements across programs, CMS reaffirmed its original position to not incorporate the EHR Incentive Program or eRx Incentive Program reporting requirements. Beyond aligning the ACO measure set closely with PQRS, CMS will further align the ACO program with the EHR Incentive Program in future rulemaking as more experience is developed with both programs. 

Risk Models
The final rule includes two risk models: Track 1 will include shared saving only and Track 2 will share both savings and losses. This is a major change from the proposed rule, as the first track would have begun as shared savings only and then transitioned to sharing losses as well. CMS did finalize its proposal that all ACOs will be required to participate in Track 2 in agreement periods subsequent to the initial agreement period. Also, those ACOs that experience a net loss on their initial agreement period will be allowed to apply to participate in a subsequent agreement period but will have to identify why they experienced the loss and specify safeguards in the application. 

Costs of Establishing an ACO
AASLD expressed concern about the upfront costs of establishing an ACO; these concerns were echoed by many groups. In response, CMS has established the Advance Payment Model. ACOs participating in this model will receive an upfront, fixed payment, an upfront, variable payment based on the number of its historically-assigned beneficiaries and a monthly payment that will depend on the size of the ACO. These advance payments will be recouped through the ACO's earned shared savings. If sufficient savings is not generated for repayment through the midpoint of the second performance year, CMS will recoup the balance from shared savings in the subsequent performance year. CMS will not recoup any outstanding balances after the completion of the first agreement period. 

This program is available only to ACOs that do not include inpatient facilities and have less than $50 million in total annual revenue and ACOs in which the only inpatient facilities are critical access hospitals and/or Medicare low-volume rural hospitals and have less than $80 million in total annual revenue.