FORMATION OF ACOS
MAY 26, 2011
Speakers
• Todd I. Freeman, Larkin Hoffman
(Minneapolis, MN)
• Ronald Waldheger, Waldheger-Coyne
(Cleveland, OH)
• Sheri Dacso, Seyfarth Shaw, LLP
(Houston, TX)
• James Egleston, Waldheger-Coyne
(Cleveland, OH)
Presentation Overview
1. Why Form an ACO
2. ACO Structure
3. Application and Approval
4. Shared Savings Options
5. Q&A
Why form an ACO
Section Overview
1.History of innovation of delivery
models
2.Newest innovation –
accountability of providers
3.Why not form an ACO
4.Why form an ACO
History of innovation of delivery
models
– Objectives
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Provide access
Reasonable cost
Coordinated care
Preventative care
Align incentives of providers and patients
Patient freedom of choice
Patient empowerment as educated consumers
History of innovation of delivery
models
– Past and existing models, including
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Fee for service
Capitation and DRGs
Staff model HMO
Alphabet soup of IPAs, PHOs and PPOs
Cost and quality ratings
History of innovation of delivery
models
– Regulatory impediments
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Anti-kickback
Physician self-referral (Stark)
Antitrust laws
HIPAA and state patient privacy laws
IRS tax exempt organization rules
Newest innovation – accountability of
providers to align incentives
– Private market – ACO-type arrangements with
private payors
– Affordable Care Act created shared savings plan
for eligible ACOs
Why not form an ACO?
– Costs of establishing are staggering
– No guarantee of acceptance in shared savings plan
or FTC antitrust waiver
– No guarantee of any shared savings
– May have to absorb shared loss
– Non-appealable CMS discretion to deny payment
of shared savings
– Economics presume existing excess care and
inefficiencies in delivery system
Then why form an ACO?
– Dynamics in your market
– Waivers of legal and regulatory impediments
– Improved patient care and revenue
– Increase, or avoid losing, market share
– Early involvement
– Likely to be required to participate in ACOs in the
future
Resources:
http://www.aaaccountablecare.org/resources/
ACO Structure
Section Overview
1. What are ACOs?
2. Legal Structure
3. ACO Ownership
4. Governance
5. Leadership
What are ACOs?
• A formal legal structure that would allow the
organization to receive and distribute
payments for shared savings to participating
providers of services and suppliers via the
Medicare Shared Savings Program ("MSSP").
Legal Structure
• Any legal structure accepted by State
Law
• Federal EIN
• Proof of existence
Who Can Own The ACO?
• Does not need to be an existing
Medicare provider
• Must have a TIN and be enrolled in
Medicare program
• Existing structure must meet criteria of
regulations
Governance
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“Shared Governance”
Every participant has a voice
Transparent
Accountable
Governance
• 75% must be composed of ACO
providers
• Must include at least one (1) Medicare
beneficiary
• Distinct from Boards of participating
ACO providers
Leadership
• CMS Proposed requirements
• Intended to foster goals such as
legislation of clinical and financial
management, with due regard to
antitrust considerations
Application and Approval Process
Section Overview
1. Minimum eligibility requirements
2. Processes and Structure
3. Content and Documentation
4. Regular Approval Route
5. Applicant Certifications
6. Fraud and Abuse Protections
7. Pioneer Program
GETTING STARTED
• CMS will require ACOs to submit with its
application, materials that describe the ACO’s
leadership and management structure as well
as its clinical and administrative systems.
MINIMUM ELIGIBILITY REQUIREMENTS TO BE AN ACO
• Minimum eligibility requirements that
generally include:
– a legal structure and governance as required by
the proposed rules.
– a sufficient number of primary care physicians to
have an assigned beneficiary population of at least
5,000.
– assessment of whether it is required to obtain a
mandatory review from the antitrust enforcement
agencies.
PROCESSES AND STRUCTURES NECSSARY TO OPERATE
AN ACO
• Quality Assurance and Process Improvement
Committee
• Evidence-Based Medical Practice or Clinical
Guidelines
• HIT/EHR Infrastructure
• Compliance Plan
• Patient-Centeredness
• Stakeholder Partnerships
STANDARD APPLICATIONS – CONTENT AND
DOCUMENTATION
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Antitrust Agencies Letter (If applicable)
Repayment Mechanism
Leadership and Management Structure
ACO Participation Documents
Quality Assurance and Process Improvement
ACO Organizational Materials
Medical Director and CMS Liaison
Disciplinary Processes
Compliance Plan
Beneficiary Communication
Description of Distribution of Shared Savings
Patient-Centeredness
REGULAR APPROVAL ROUTE – DOCUMENTS
• Content: Patient Centered Criteria
– Documentation of how the ACO applicant will
meet patient centered care criteria
• Content: Health Needs Evaluation
– Documentation of the ACO’s “needs assessment”
processes for evaluating the needs of its Medicare
population, including consideration of diversity
and a plan that addresses the needs of those
persons
ADDITIONAL REQUIREMENTS
• Individual Care Plans
– Required to have systems in place to identify highrisk individuals and processes to develop
individual care plans for targeted patient
populations
– Plans must:
• be tailored to the beneficiary’s health and psychosocial
needs
• account for beneficiary preferences and values
• identify community and other resources to support the
beneficiary in following the plan
ADDITIONAL REQUIREMENTS
• Repayment Mechanism
– Applicant must submit documentation of an
appropriate repayment mechanism to cover any
losses, such as reinsurance, an escrow, a surety
bond, or a line of credit
APPLICANT CERTIFICATIONS
• ACO officers or directors must certify that the
applicant meets certain requirements:
– Legitimate Legal entity: recognized under state law
– Accountability: participant is willing to report to CMS on
the quality, cost, and overall care of the Medicare fee-forservice beneficiaries assigned to the ACO
– Compliance with ACO Agreement: agree to terms of threeyear agreement
– Accuracy of Information Submitted: agree that all
information submitted is truthful, complete, and accurate
FRAUD AND ABUSE PROTECTIONS
• Compliance Plan
– Designated compliance officer
• Not legal counsel to the ACO and who reports directly to the ACO’s
governing body
– Mechanisms for identifying and addressing compliance
problems related to he ACO’s operation and performance
– Methods for employees or contractors to report suspected
concerns related to the ACO
– Compliance training for employees and contractors
– Requirements for reporting suspected violations to
appropriate law enforcement agencies
REGULAR APPROVAL ROUTE
• CMS must approve or deny before end of
calendar year; not sure what the first deadline
will be
• Approval effective for three years with a 60day notice termination provision
ISSUES WITH REGULAR APPROVAL ROUTE
• Comments to CMS, to date, do not include
anything about application and approval
process
– Comment period ends June 6th, 2011
EXPEDITED APPLICATIONS
• Available through the Center for Medicare and
Medicaid Innovation (Innovation Center) through a
special program called the “Pioneer Program”
• Allows health groups that already have experience
coordinating care for patients among physicians and
hospitals to immediately apply to become an ACO
• Could be up and running by Fall 2011, as opposed to
having to wait until 2012
THE PIONEER PROGRAM
• The Innovation Center is interested in testing
alternative payment models that
– Include escalating levels of financial accountability
through successive performance periods during
the Participation Agreement
– Provide a transition from fee-for-service to
population- based payment by the third
performance period
– Generate Medicare savings
THE PIONEER PROGRAM
• General Description:
– designed for health care organizations and
providers that are already experienced in
coordinating care for patients
– accelerates period of time for providers to move
from a shared savings to a population-based
payment model
– designed to work in coordination with private
payers by aligning provider incentives
PIONEER PROGRAM
• Payment Models
– First two years: shared savings payment policy
with generally higher levels of shared savings and
risk
– Year three: eligible to move a substantial portion
of their payments to a population-based model if
can show savings using above model over first two
years
THE PIONEER PROGRAM
• Applicants are expected to have extensive
experience with systematic care improvement
efforts, and either already have, or be
prepared to enter payment arrangements that
include financial accountability and
performance incentives
THE PIONEER PROGRAM
• Letters of Intent are due June 10th, 2011.
– Applications received from organizations that have not
submitted a letter of intent will not be considered.
– Letters of intent will only be used for planning purposes
and will not be binding.
• Applications must be postmarked on or before July
18th 2011. CMS reserves the right to request
additional information from applicants in order to
assess their applications.
Shared Savings Options
Section Overview
1.Shared Savings Payment
2.Two Risk Models
3.Program Overview
Shared Savings Payments
• Comparison of average costs 3 most
recent years prior to the beginning of
the ACO against a year in which the ACO
agreement is in effect
• Achieve the “minimum savings rate”
• Participate in the “sharing rate”
• Maximum percentage (“sharing cap”)
• 65 Quality Measures
Two Risk Models
ONE-SIDED MODEL
•ACO shares in savings, not losses (first
two years)
•Up to 50% beyond the threshold
•Becomes a 2-sided model in year 3
Two Risk Models
TWO-SIDED MODEL
•Shares in savings and losses immediately
•Up to 60% of savings beyond threshold
•Liable for losses beyond 2% and up to
–5% of benchmark, year 1
–7.5% in year 2, 10% in year 3
•Liability cap at 35% upon perfect score
•FQHC or RHC included, qualify for additional
shared savings
CMS Table
Offset Future Losses
•Withhold of Shared Savings
•25 percent withhold in order to offset
any future losses under the two-sided
model.
•Must complete all three years to recoup
the 25-percent withhold
65 Quality Standards
– Five standard domains –
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Patient care giver experience
Care coordination
Patient safety
Preventive health
At risk population/ frail elderly health
Scoring and measurement concepts. Each of the
five domains will be equally weighted in
determining an ACO's overall quality performance
score.
Upcoming Webinars
Operations of ACOs – Part 1
June 2, 2011
Operations of ACOs – Part 2
June 23, 2011
Understanding Regulations of ACOs
July 14, 2011
For more information and to register, visit
www.aaacountablecare.org
For More Information
Todd Freeman
Larkin Hoffman
952-896-3236
[email protected]
Jim Egleston
Waldheger-Coyne
[email protected]
(440) 835-0600
Ron Waldheger
Waldheger Coyne
(440) 835-0600
[email protected]
Sheri Dacso
Seyfarth Shaw, LLP
713-238-1810
[email protected]
AAACO Website
www.aaacountablecare.org